Corn prices received by Brazilian growers down 29.2% thus far in 2013 through July 25 amid perspectives of record crop, CEPEA says; ESALQ/BM&FBovespa Index for corn down 7.4% to 24.22 reais/60-kg bag on July 31
August 2, 2013
– Perspectives of a record second corn crop in Brazil, even after rains in June and frosts in late July, still press down prices. Considering regions surveyed by Cepea in Brazil, in the partial of 2013 (from December 28, 2012 to July 25, 2013), averages of corn prices received by growers downed 29.2%. Prices of trades between assembly and processing companies moved down 31% in the same period.
In regions where the harvesting of the second crop may hit a record, such as in Mato Grosso, price drops are more significant. In the partial of the year, prices of trades between assembly and processing companies in Sorriso decreased sharply 47%. In Mato Grosso do Sul areas, the decrease is around 36%.
In Rio Grande do Sul areas, prices are moving down 15% approximately. At Paranaguá port, the decrease is 24%.
As for the demand, purchasers have been closing trades only when it is needed. Shipments, in turn, are starting to increase. Players expect a sharp increase of exports, which may, at least, limit domestic drops.
Brazilian corn shipments are still competing with soybeans’. It is worth noting that there is competition with corn exports from Ukraine and Argentina. Moreover, expectations of the crop in the US are also good.
The downward trend of corn quotes, in general, has been verified since November 2012, but prices were underpinned between May and June. Weather conditions were favorable for the harvesting of the second crop, which is nearing the peak period, mainly in Paraná and Mato Grosso.
In late July, players were fearing that frosts would affect part of crops in Paraná, Mato Grosso do Sul and São Paulo, which were in development stage.
In Paraná, data from Seab/Deral indicates that 29% of the planted area with the second crop (2.17 million hectares in the state) was already harvested before the frost registered in late July. Producers were concerned with roughly 25% of the planted area, 387 thousand hectares, which were in the fructification stage (more susceptible to sudden weather changes), located in the northern region of Paraná.
In July, the ESALQ/BM&FBovespa Index for corn (Campinas-SP region; cash price, using the CDI discount rate) downed 7.42% and closed at 24.22 or 10.63 dollars per 60-kilo bag on July 31. Considering the NPR discount rate, prices in Campinas-SP region (cash price) closed at 23.87 reais or 10.48 dollars per 60-kilo bag, for a decrease of 7.2% in the same period. (Cepea – Brazil)