Just one year ago, Brazil was harvesting what turned out to be a disappointing 3.23 billion bushel (82.0 million metric ton) corn crop, made smaller by dry weather late in the season. The U.S. benefitted from increased corn exports early in 2018-19 as Argentina's crop also suffered drought in 2018.
Now, in 2019, the tables have turned. As both Brazil and Argentina have bounced back with larger corn crops, it is U.S. corn exports that are starting to wane, losing the battle to cheaper competition down south.
According to USDA's July 11 WASDE report, Brazil's corn production is on track to hit a record high 3.98 bb (101.0 mmt) in the 2018-19 season, a 23% jump from last year. The yield is not so impressive at the equivalent of just 92.0 bushels per acre, but supplies and exports are expected to be higher in the local marketing year that ends Jan. 31, 2020.
Typically, Brazil's corn exports pick up in July with the harvest of the second corn crop and that appears to be happening again this year. USDA is expecting Brazil to export 1.34 bb (34.0 mmt) of corn, up 35% from the previous year's 990 million bushels (25.14 mmt).
While the increased corn exports from Brazil do offer more competition to the U.S., there is not much chance those exports will be stretched higher. Brazil is the second largest producer of beef in the world behind the U.S. and will consume two-thirds of its own record corn production.
USDA estimates Brazil's ending corn stocks at a slim 308 mb (7.81 mmt) in 2018-19 and this spring's planting problems in the U.S. have already seen Brazil's corn prices pushed higher. As of Monday evening, FOB corn in Brazil was priced at the equivalent of $4.79 a bushel, up from just $3.78 a bushel in mid-May.
That is still a bargain compared to the U.S. FOB price of $5.16 a bushel in New Orleans so exports are likely to keep flowing Brazil's way, at least for a while. It is funny sometimes, how quickly circumstances change, but this time around it is Brazil's corn producers that will benefit from this year's roll of the dice.
Todd Hultman can be reached at Todd.Hultman@dtn.com
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