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December 23, 2019

Brazil Could Have Lowest Corn Carryover in Six Years

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Domestic corn prices are strong in Brazil and the question is if the strong prices will encourage Brazilian farmers to plant their safrinha corn later than they normally would. A lot of the soybeans were planted later than normal this year which means the safrinha corn will also be planted later than normal as well. Normally, the ideal planting window for safrinha corn usually closes about the third week of February and the "drop dead" date for planting safrinha corn is March 10-15.

Brazil is exporting corn at a torrid pace and if the pace continues, the country will end up with the smallest corn carryover in six years. In their December Crop Report, Conab estimated that Brazil would export 40 million tons of corn in 2019 and that the carryover would be 13 million tons. But at the pace that the corn has been exported during the first half of December, the total corn exports during 2019 could be closer to 42.5 million tons and the carryover closer to 10 million tons, which would be the smallest in six years.

If the export total hits 45.0 million tons as some people are speculating, the carryover gets even tighter to maybe only a month or less supply of corn. A 10 million tons carryover represents about a month and a half of demand if you combine both domestic and exports.

As a result of the tight corn supplies, domestic corn prices in Brazil have remained very strong and they are expected to remain that way until the safrinha corn starts to be harvested next June.

Livestock producers in southern Brazil have already contracted to import corn from Argentina early in 2020 to avoid a corn shortage and higher domestic prices. JBS announced a 200,000 ton corn purchase from Argentina and more announcements are expected. Livestock producers have been warned that it is possible that corn prices could get as high as $5.50 a bushel before new corn supplies become available.