The United States and Brazil are both positioning themselves for a record setting corn harvest, making for an exceptionally competitive dynamic in the global corn market.
Earlier concerns of weather related damage to Brazil's summer crop have been eliminated.
Additionally, Brazil is approaching the completion of an all-time high second season corn crop planting. It should be noted that Brazil routinely harvests two corn crops. However, final acreage intentions remain unclear, as a recent softening of domestic corn prices could decrease corn plantings.
Alfredo Navarro, a U.S. Grains Council representative based in Brazil, confirms that the Brazil summer crop harvest has in fact matched the anticipated volume of 36 million metric tons (1.4 billion bushels).
Despite adverse planting conditions, Brazil is expecting an astounding 20 percent increase in corn plantings, year over year. A record 7.1 million hectares (17.5 million acres) are estimated to be devoted to second season corn, yielding another record setting 29 million tons (1.1 billion bushels).
If the favorable weather continues and these projections are met, Brazil's total corn harvest for the 2011/2012 marketing year is expected to exceed 67 million tons (2.6 billion bushels), a 13.5 percent increase over last year.
Typically, Brazil exports between 15 and 20 percent of their crop.
Record yields and historic planting intentions aren't the only factors weighing on the market. According to Navarro, lower than anticipated domestic usage and exports have inundated Brazil with ample stocks.
Navarro attributes this reduction in previous projections due to several factors.
"The main reason, in my opinion, is due to a reduction in pork production," said Navarro. "The Brazilian pork production is under one of the worst crisis ever, due to three years of continuous decapitalization of the farmers (increased debts). While sale prices improve slightly in the winter, they have been below cost of production for a long time. The embargoes from Russia to Brazil pork and the recent Argentina decision to limit pork imports have also worsened the situation.
"Increases in other segments will not be sufficient to compensate the swine decrease. Poultry consumption in the first quarter has also been below estimates. Poultry may react faster to an improvement in price but Brazil will have more corn to export."
With the United States also projecting a record corn crop, the stage is once again set for intense global competition for international corn markets.
"As the United States competes to build and defend market share, marketing programming offered by the Council is becoming increasingly more important," said Wendell Shauman, USGC chairman.
"Through technical assistance, trade barrier alleviation, and boots on the ground networking, the Council remains the world's most trusted purveyor of marketing programming of U.S. corn, sorghum and barley."