Brazil: Bag of corn costs almost twice as much as two years ago

RIO DE JANEIRO, BRAZIL – If pork and egg producers were already struggling since the pandemic because of the high commodity prices, the war has become an extra cause for concern. With Ukraine and Russia being the fourth and sixth largest exporters of corn, respectively, corn prices skyrocketed in the first weeks after the Russian military operation.

The average price of the bag was R$99.69 (US$21) – a level not seen since May 2021 and almost double that of two years ago.

However, there are signs of a truce in the market, which can guarantee, at least temporarily, a relief for animal protein producers.

The average price of a sack of corn is R$90.22, according to the Center for Advanced Studies in Applied Economics of the Luiz de Queiroz College of Agriculture (Cepea-Esalq/USP).

Besides the dollar’s devaluation having helped this retreat, the expectation that the second harvest of this year in Brazil will be good reduced the pressure on the price.

The third-largest exporter of corn, the country should have a 46% larger offer in the second harvest of 2022, compared with the 2021 harvest, according to an estimate released last week by the National Supply Company (Conab).

EXPORT

Data from the USA point out that, at least this year, Ukrainian exports will be 23% lower than expected. It is a significant reduction in the volume of corn available in the market but lower than expected in March.

Even though there are indications of an improvement for protein producers, the tendency is for prices not to fall much further either. In the future market, the price stays between R$86 and R$87 until the end of the year.

For the president of the Brazilian Association of Animal Protein (ABPA), Ricardo Santin, prices should remain high until early 2023.

The researcher Lucilio Alves, from Cepea-Esalq/USP, remembers that it is still not known if the Ukrainians will be able to plant the next crop. “The war jeopardizes the supply of seeds, fuel, fertilizers, and commercialization. A good part of the production used to be transported via the Black Sea, which is now complicated. All this can still affect prices,” he says.

With information from O Estado de S. Paulo

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