EXPLANATIONS FOR THE DISAPPEARANCE OF CORN
Brazil’s corn is mainly divided into two main crops: the first crop is harvested in February every year, accounting for only about 22% of the year’s output, so it is usually consumed domestically. As a consequence, the period from January to June is off-season for export. Meanwhile, the second crop, with the harvest time from June to August, is exported massively from July to November.
As an alternative to corn, exporters turned to serving new Brazilian soybeans, causing total corn shipments from the country in February to drop more than 60% from January, to about 2.27 million tonnes. Corn sales also fell, to just 70,000 tons in February, down from 983,700 tons in January and more than 1 million tons in December.
Previously, the majority of corn imported into China was from the US and Ukraine, but since the Ukraine crisis broke out, there are concerns that China’s corn imports will become increasingly dependent on a single source – the US. Therefore, Brazil has become the “golden” choice for China to develop corn import channels.
Since December last year, China has officially become Brazil’s largest corn export channel. When the second crop returns, corn shipments from Brazil are highly expected to soon regain its place, even becoming the world’s largest corn supplier this year.
SOYBEAN TEMPORARILY TAKES THE LEAD
However, the lack of corn supply does not mean a disadvantage, because Brazil’s soybeans are having impressive achievements in the US. Besides corn, the country has been the largest supplier of soybeans to China in recent years. Currently, China is importing 60% of soybeans from Brazil and 33% from the US.
Thanks to the shift of global trade flows, farmers in Brazil are facing many advantages, but also need to follow the needs of the Chinese. Beijing’s imposition of a 25% import tax on US soybeans has caused Chinese businesses to flock to Brazil to buy substitutes. Moreover, the supply of sunflower oil from the top exporter Ukraine is shrinking. As a result, the prices of substitutes such as soybean oil skyrocketed, giving Brazilian mills an incentive to process more.
The general picture shows that Brazil is becoming China’s optimal choice for both corn and soybean products. However, Brazil still has to be wary of supply competition from the US that reduces revenue, according to information from Reuters in February. Besides, despite the political turmoil, Ukraine is still one of the three largest suppliers of corn and has an attractive price, which remains a major competitor to Brazil.
Ha Trang
