What is the scenario for the start of the corn harvest in Brazil?

Find out what the prospects are for the start of the first-crop corn harvest in Brazil, with an emphasis on the role in the domestic market.

March 11, 2024

hEDGEpoint Global Markets

Currently, the harvest of the first corn crop is beginning in several Brazilian states. This period is also known as the summer harvest and began between September and October 2023.

Although the first corn crop has no impact on global marketing dynamics, it does influence the domestic market. In other words, production is intended for domestic consumption. Consequently, it can affect prices locally.

We invited Pedro Schicchi, Grains and Oilseeds Market Intelligence Analyst at hEDGEpoint, to explain:

  • The role and importance of the summer corn crop in the Brazilian calendar.
  • Prospects for production, area and productivity.

Happy reading!

Summer corn crop: understand its role and importance in the Brazilian calendar

According to Schicchi, the summer corn crop is smaller in Brazil. This is because the crop’s biggest harvest in the last 10 years has been the winter one:

Soybeans gained ground during the summer planting season. As a result, many producers choose to plant this grain, since they can plant corn in the winter,” says Schicchi.

In the 22/23 season, the winter corn crop was very productive. Because of this situation, stocks of the commodity remain well stocked, which has accentuated producers’ preference for planting soybeans in the summer.

However, as the winter corn crop begins to be harvested in July, the summer corn crop is still needed to supply the domestic market in the early months of the year:

“Supply is therefore mainly for the domestic pork and meat market. The Brazilian states with strong corn production in the first harvest are those that also have a strong presence of these industries,” says hEDGEpoint’s Grains and Oilseeds Market Intelligence Analyst.

These include Rio Grande do Sul, Paraná, Santa Catarina and Minas Gerais. In the south of Brazil, unlike the north-central region, it is more difficult to grow the winter corn crop due to the imminent risk of frost. For this reason, a little more corn is planted in the summer.

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What are the prospects for the start of the summer corn harvest?

Last year’s winter crop showed record corn production, with high productivity and an increase in the area planted in the country. In addition, the global scenario also produced good results, especially in the United States. As a result, there was an excellent supply of corn.

As a result, producers’ margins for the summer corn crop have become tighter:

“As a result, production migrated to soybeans or there was less expansion of the area for planting corn. This situation leads to lower production of the summer corn crop,” adds Schicchi.

According to the Brazilian National Supply Company (Conab), the weather has negatively affected crops in the 2023/24 corn and soybean harvest in the main producing regions. El Niño directly influenced weather extremes and brought:

  • Excessive rainfall and low light levels for much of the crop cycle. This reduced the productive potential of corn in the South and in São Paulo.

For the 2023/24 summer corn crop, the area under cultivation is estimated at 3,931.9 thousand hectares, 11.5% less than in the previous cycle. Production is expected to be 23,607 thousand tons, 13.8% lower than in the previous season.

“Productivity is good, but the smaller area explains the reduction in production. Historically, it’s not a substantially low figure. Therefore, there is little risk of it affecting international prices, as it is a more domestic crop in Brazil. Therefore, the impacts are momentary and regional, especially in places with strong meat production,” adds Pedro Schicchi.

Brazil’s First Corn Crop – Area, Productivity and Production (M ha/mt/ha/M mt)

Primeira Safra de Milho Brasil - Área, Produtividade e Produção (M ha/mt/ha/M mt)

Source: Conab

Read also:

hEDGEpoint: subscribe to our newsletter and stay informed about the corn market

Various aspects affect the commodities market. As you can see, fluctuations in supply and demand have repercussions throughout the logistics of the production chain. The weather can also compromise the development of the crop.

In this sense, risk management makes all the difference in protecting businesses from volatility. With it, producers can adopt hedging tools to avoid sudden price fluctuations on the domestic market, for example.

In addition, participants in this sector need to keep up to date with all the movements that take place. In the corn market, it is essential to understand the dynamics of production and consumption, as well as the factors that can change them.

hEDGEpoint offers a blog newsletter with the main events and their possible consequences. Subscribe now and carry out your operations with greater knowledge and assertiveness.

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