The volatility of the Real and the increase in domestic demand keep corn prices stable in the domestic market.
Given the sharp devaluation of the Real against the Dollar, corn prices remained stable on the domestic market during the week. Few deals were made and, with the end of the year, Brazilian factories prefer preventive maintenance of their structures to going to the market to buy, thus promoting collective vacations for employees during the Christmas season.
The demand for corn is highly concentrated in the domestic market, which maintains more attractive prices than those practiced in the foreign market, exceeding the expectations of sellers with more attractive prices in recent months, leading Brazil to export less in 2024. Compared to 2023, Brazil exported 33.80% less, with the total exported in 2024 at 37 million tons, against 55.89 million tons in 2023.
Reasons for the reduction in exports:
Smaller harvest: Brazil harvested 12.3% less than in the 2022/2023 harvest, reaching approximately 115.7 million tons in the 2023/2024 harvest.
Prices: in the 2022/2023 harvest, export prices averaged US$ 244 per ton FOB, while in the 2023/2024 harvest, average prices fell to US$ 205 per ton FOB, 16% lower when comparing one harvest with the other and between the periods from January to November of each year.
Domestic demand: with less attractive prices on the foreign market and strong demand on the domestic market, the seller preferred to sell corn on the domestic market. If we compare producer prices in December 2023 with current prices, in some regions there is a 13.5% increase in current prices. Prices for industries exceed R$75.00 per 60-kilogram bag (US$ 202.43 per ton) without taxes and, with taxes, the final price can reach approximately R$90.00 per 60-kilogram bag (US$ 242.92 per ton). The reason for the increase in prices and costs is that the larger quantity purchased comes from the State of Mato Grosso, increasing the cost with the increase in freight and interstate tax (ICMS).
What to expect from 2025?
Exports: with a projected harvest of approximately 127 million tons and with the dollar futures exchange rate likely to reach R$6.50, prices may become an important component for increasing exports, with an increase of approximately 30%, reaching 48 million tons to be exported by Brazil.
Consumption: with domestic consumption stagnant at approximately 83.50 million tons, domestic demand will remain strong, causing an increase in competition with exports, which may be an important factor for increasing prices and premiums.
Handing: Brazil may experience significant productivity losses in some regions, especially with the increase in 'corn leafhoppers' in crops and an increase in crop maintenance costs, the greatest difficulty of which is the management of pesticides (chemical or biological) to combat insect infestations due to accessibility to plantations that, notably, are taller than soybeans.
Climate: the climate is under the influence of the climate transition from "El Niño" to "La Niña", and may remain "neutral" until the Brazilian autumn, which does not bring significant changes in the influence of the climate in the various regions of corn production in Brazil. On the contrary, it may be a special year for a full harvest. Further south, the climate is rainy and the temperature is mild, with peaks of low temperatures at night and increased temperature and solar radiation during the day, making it the perfect climate for the development of corn crops. If the climate remains neutral until July 2025, when the harvest begins in Mato Grosso, we will certainly have a full production for the second crop, which will increase the availability of the product on the market.
World production: world production will be 1.219 million tons, 10 million tons below the previous harvest, and the United States will produce approximately 5 million tons below the previous harvest, reaching 384.64 million tons, but increasing its export expectations to 62.87 million tons.
World consumption: in its latest report, the USDA reported a stagnation in world exports, remaining at the same levels as the previous harvest, at approximately 193 million tons, and for domestic consumption at a global level projected at 1,237.66 million tons, approximately 20 million tons higher than the 2022/2023 harvest. When comparing world consumption with China's consumption, it will be 313 million tons, but its own production will increase by 4 million tons, reaching 292 million tons in the current harvest. With lower imports, approximately 14 million tons, China will reduce its final stocks by 7 million tons, leaving its final stocks at 204.27 million tons.
Final stocks: there will be a reduction in world stocks from 316.22 million tons to 296.44 million tons, that is, a reduction of approximately 20 million tons, thus projected:
United States: from 44.72 to 44.15 (stagnant).
China: from 211.29 to 204.7 (reduction).
Brazil: from 7.84 to 2.84 (reduction).
Argentina: from 4.89 to 2.79 (reduction).
Considerations:
The USDA predicts that stocks in Brazil and Argentina will be below the previous harvest year, and the US department predicts that the United States will increase its export program from 58.23 million tons to 62.87 million tons, thereby increasing supply to the foreign market. As for China, a reduction in final stocks is expected compared to the previous harvest, returning to its normal levels of carryover stocks. If China decides to increase its final stocks, this measure could become an important component in maintaining and/or increasing demand for corn, further intensifying global competition, with a potential increase in product prices.
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