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September 18, 2015

Brazilian Corn Exports need to Ramp Up in order to meet Goal

The rains that are needed to start planting the 2015/16 soybean and corn crops in Brazil may also make it hard for Brazil to reach the level of corn exports expected from Brazil. Conab is estimating that Brazil will export 26.4 million tons of corn from February 2015 through January 2016.

According to the Center for Advanced Economic Studies (Cepea), in order to meet that goal, Brazil would need to export more than 4.4 million tons during each month from October through January which if achieved, would be a record amount of corn for each month. Cepea calculates that Brazil would need to export 220,000 tons of corn per day considering 20 working days per month. During the first two weeks of September, only 1.06 million tons of corn were exported from Brazil and last week only 98,800 tons of corn made it out the country.

The reason for the slow pace over the last two weeks has been wet weather in southern Brazil and the situation could get worse. The two main ports for corn exports are the Port of Santos and the Port of Paranagua, which are both located in southern Brazil. During periods of rainfall, most of the holds on the ships need to be closed until the threat of rain has passed. The potential problem going forward is that El Nino is expected to generate heavier than normal rainfall in southern Brazil between now and the end of the year. If that turns out to be the case, then they may not be able to average 20 days per month loading corn. The best month this far in 2015 for Brazilian corn exports was January when Brazil exported 3.4 million tons.

Brazil has remained competitive in the world market for corn exports due to the weakening of the Brazilian currency which is currently trading at approximately 3.9 to the dollar. As a result, corn for October delivery at the Port of Paranagua was being bid yesterday at R$ 34.50 per sack (approximately US$ 4.02 per bushel using an exchange rate of 3.9 reals per dollar). In Brazilian reals, these are good prices.

Additionally, competition from U.S. exports will start in October as U.S. farmers start to harvest what is estimated to be the third largest corn crop in U.S. history.