RIO DE JANEIRO, BRAZIL – Weather conditions were responsible for the cut in the projection from 80 million tons early in the year to 62 million tons in June. Domestic demand will continue strong and prices will remain high despite the progress of the harvest.
At the start of the year, StoneX was projecting a production of 80 million tons of second harvest corn. However, adverse weather conditions, particularly the lack of rainfall between April and May, reduced volumes month by month until the current production expectation of 62 million tons was reached.
According to StoneX’s market intelligence analyst, João Pedro Lopes, this level is 17% lower than the 2020 second harvest corn, despite an increase of 1 million hectares in the cultivated area from one year to the next.
This decrease in supply should have a direct impact on the grain market in the second semester. The specialist points out that domestic demand remains strong and should reach a record 71.5 million tons, which coupled with tight supply, will keep prices high and allow further appreciation also after the arrival of the new harvest.
Another point that favors this expectation is that over 60% of this production has already been negotiated, therefore not all harvested volumes will be available in the market after the harvest progresses through June, July, August and September.
On the other hand, the reduction in Brazilian exports, which last year totaled 35 million tons and this year should reach 21 million tons, according to StoneX’s projections, is a trend that should readjust this supply.