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January 16, 2020

Tight Corn Supplies in Southern Brazil could Worsen in Near Future

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

Recent hot and dry weather in southern Brazil could aggravate an already short supply of corn in the region. Southern Brazil is the center of hog and poultry production in Brazil, but farmers in the region cannot produce enough corn to meet demand. Therefore, the needed corn is brought in from central Brazil or imported from neighboring Argentina or Paraguay.

The tight corn supplies is especially important for hog and poultry producers in the state of Santa Catarina, which is the Brazilian state that must import the most corn. Livestock operators are very concerned this year because they will need to bring in more corn than normal due to the decreased local corn production.

In a study conducted by the Agriculture and Livestock Confederation of the State of Santa Catarina (FAESC), they concluded that the western part of the state was hardest hit by the adverse weather. For example, in the municipality of Campo Novos, which is located in west-central Santa Catarina, it is estimated that 18% of the soybeans, 15% of the corn, and 12% of the dry beans were lost due to the hot and dry weather. In other regions of western Santa Catarina, crop losses are estimated at 30%.

The expected corn shortage could get even worst due to adverse weather in the neighboring state of Rio Grande do Sul where statewide corn losses are estimated at 33% or more.

The President of FAESC and the President of the National Agriculture and Livestock Confederation of Brazil (CNA), feel one way to improve the situation is to import more corn from Argentina and particularly Paraguay. The corn producing region of southern Paraguay is quite close to western Santa Catarina (approximately 500 kilometers), which is much closer than the corn fields of central Mato Grosso (approximately 2,000 kilometers).

Brazil, Paraguay, and Argentina recently agreed to customs and phytosanitary standards which cleared the way for corn to be brought in by truck from southern Paraguay across Argentina and into western Santa Catarina.

JBS has already announced that they will be importing 200,000 tons of corn from Argentina in order to meet their livestock needs. Given the current situation of full-season corn production in southern Brazil, more corn imports are possible over the next few months until farmers start to harvest their safrinha corn in June and July.