São Paulo – Estimates for Brazilian maize production anticipate a decline for this year. The latest forecast by the Brazilian National Supply Company (CONAB) indicates the total output will be 86.6 million tonnes for the 2020/2021 harvest, a 15.5% decrease over the previous cycle.
CONAB attributed the reduction to the low rainfall during the months of April and May. The contraction should directly impact exports, including those destined for North African countries, such as Egypt.
According to Anderson Galvão, analyst and CEO of consulting firm Céleres, the initially expected export capacity for the Brazilian product was 40 million tonnes. This amount, however, could be downsized to 18 million. “It is a cutback of over 50% from the initial volume. For this reason, Egypt and other countries in North Africa and the Middle East, some of the main buyers of Brazilian maize, will have to seek supplies in other countries, such as Ukraine, Romania, and Russia,” explained the consultant.
Disruption in Latin America
Galvão recalls the situation is worsening since another valuable cereal producer in Latin America, Argentina, will also not have enough stock to meet global demand. On the other hand, Brazil will only be able to export in large volumes again next year. “The supply chain framework in Brazil will only return to normal if everything goes well, in July next year. There will be at least eight months of maize shortage,” pointed out the analyst.
In Brazil, maize is planted at different times of the year, but the pivotal part of production is concentrated in the winter crop, harvested from July to August. This crop meets international demand since the summer crop does not fully supply even the domestic market.
For the analyst, even with the likely increase in the planted area in Brazil, the market should only calm down in the medium term. “Until then, the supply will be very limited. Additionally, this year there is La Niña, which normally brings dry weather to Argentina and the southern part of Brazil, in theory, intensifying the risk of harvest losses once again in 2022 and 2023,” explained Galvão. La Niña is the atmospheric-oceanic phenomenon that causes changes in the temperature of the Equatorial Pacific Ocean, cooling its waters and altering the distribution of heat and humidity in many parts of the world.
Attention to the Middle East
The price of maize, which is already at a peak, should also remain high on of Chicago. “Even with the American crop having increased its planted area, prices will remain close [to what they are now],” said Galvão.
For the analyst, it is necessary to be aware of the consequences this surge in food prices, such as maize, could have in the Arab countries. “From a political and economic standpoint, this makes food prices expensive in North Africa and the Middle East. And if you , ten years ago, when we had the last spike in prices, this, among other things, fueled the Arab Spring,” pointed out the CEO of Céleres.
Translated by Elúsio Brasileiro
