Brazil aims to take Ukraine’s place in global corn market

RIO DE JANEIRO, BRAZIL – Brazil, one of the world’s largest grain producers, wants to take Ukraine’s place in the corn market and believes it can do so despite the many challenges its production still has.

Strong demand and the West’s hybrid war against Russia have driven international corn prices to their highest levels since 2012, attracting the attention of Brazilian exporters. Ukraine and Russia account for between 16% and 18% of the global corn export market.

As for Ukraine, there are many doubts about the viability of its crop, given its lack of labor – busy defending the country or fleeing Russian attacks – and supplies such as fuel and the blockage of key export routes.

In Russia’s case, the international economic encirclement of Vladimir Putin’s government will cause severe difficulties for its foreign trade activities.

With these two countries out of the picture, market attention turns to two other significant players: Argentina and Brazil, which are the world’s second and third-largest corn exporters, respectively, after the United States.

According to the U.S. Department of Agriculture, Ukraine ranks fourth, and this is leading to an urgent need to secure grain supplies for some of its biggest customers, such as the European Union.

In Brazil, forecasts are suitable for the second corn crop of the season after a severe drought hit the first. The Brazilian National Supply Company (Conab) estimates that total grain production in the 2021/22 crop will increase 29% to 112.3 million tons, driven by this second harvest.

“We have the conditions to produce a little more. We are already planting more than last year,” Cesário Ramalho, institutional president of the Brazilian Corn Producers Association (Abramilho), told EFE.

“Brazil has excellent growth potential, facing a great opportunity. We have the market, the buyers, and its territory,” Ramalho adds.

CLIMATE, COST, AND FERTILIZER ARE CHALLENGES

However, several factors may derail this expectation. First of all, weather forecasts are not the best, and there is a possibility that the La Niña phenomenon will last until June or July.

In this regard, Felippe Serigati, a researcher at the Agribusiness Center of the Getulio Vargas Foundation (FGV Agro), believes that “the second corn harvest, if it turns out well, will mainly serve to cover the damages of the first one.

In addition, Ramalho said, Brazil consumes 70% of its production because it is the world’s largest meat exporter, and much of the corn is used to produce feed for pigs and poultry.

But with rising prices and international demand, local producers may begin to focus more on the export market. “Brazil needs to be vigilant because it needs a lot of corn, and there is some panic. This race for corn worries me,” Ramalho says.

In addition, there are high costs and doubts about the supply of fertilizers, an area in which Russia is one of the world’s largest producers.

“The corn sector will start the next cycle with very high costs and uncertainty of access to these inputs,” the expert adds.

However, Ramalho downplays the possible shortage of fertilizers due to sanctions against Russia, which has mobilized the Brazilian government in search of new suppliers. “We have very well-fertilized soils. We can grow crops for a year with less and, on the most fertile soils, even without them [fertilizers],” he says.