With very tight corn supplies and record high domestic corn prices, the Brazilian Minister of Agriculture announced last week some financial incentives for farmers to increase their corn and grain sorghum production. Large livestock producers in southern Brazil are already importing corn from neighboring Argentina and Paraguay in order to keep their facilities operational and they have been petitioning the government to take a more active role in increasing grain production.
The Brazilian government announced earlier this week the suspension of import tariffs for grain imported from outside the Mercosul Trading block. The suspension will be in place until December 31, 2021 and will include corn, soybeans, soybean meal, and soybean oil. In theory, this could open the door for corn imports from the United States and/or Ukraine.
The production of ethanol from corn continues to increase in Brazil. According to the Union of Sugarcane Industries (Unica), the production of ethanol from corn during the 2020/21 crop cycle, which went from April 2020 to March 2021, increased 58% compared to a year earlier to 2.57 billion liters. Corn-based ethanol now accounts for 9% of Brazil’s total ethanol production.
U.S. soybean futures rose 1.7% on Thursday, underpinned by the strong demand highlighted in the U.S. Agriculture Department’s monthly supply and demand report on Tuesday, traders said.