As Brazil's second-crop corn begins to arrive on the market, prices have retreated from record highs over the last week.
Corn was being quoted at R$34 per 60-kilogram bag ($4.13 per bushel) in Sorriso, center-north Mato Grosso state, Monday, well down from R$41 one month before.
However, prices remain substantially higher than last year. Twelve months ago, the bag was quoted at R$13 in this massive grain-producing county.
The decline in prices indicates farmers in Mato Grosso and surrounding areas may not have sold as much corn ahead of harvest as some analysts had predicted, Safras e Mercado, a local farm consultancy, said in a weekly report.
It is common to hear that Brazilian farmers had sold as much as 70% of their crop for export ahead of planting.
One explanation for the price decline would be that traders had canceled export deals to capture better prices on the domestic market. But Safras said this has not been happening on a substantial scale.
Last week, the Brazilian Cereals Exporter Association (ANEC) lowered its 2016 export view from 30 million metric tons to 23 mmt, with some predicting the final will be lower.
The figure was slashed amid heavy losses to the second crop in Mato Grosso and the center-west after a very dry April.
With the crop about 1.5% harvested, farmer testimony is reinforcing ideas that losses were significant.
On Friday, INTL FCStone lowered its second-crop corn view by 400,000 metric tons to 49.4 mmt. That's a sharp decline on last year, when around 55 mmt was produced, despite a 6-7% increase in planted area.
"After the very dry weather in April. The accumulated rains (in May) didn't allow for (crops) to totally recuperate in Mato Grosso and Goias," said Ana Luiza Lodi, market analyst at INTL FCStone.
With the second corn harvest picking up pace in the next couple of weeks, it will be interesting to see if prices continue to decline.
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