Brazil Corn Exports Ready to Rock

Brazil Corn Exports Ready to Rock image

Brazil Corn Exports Ready to Rock

06/19/2019 | Author: Matt Smith

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Word that US corn production will be sharply lower this year has spurred talk that the United States will import a significant amount of corn this year from Brazil given FOB spreads between the two countries. Brazil corn was last quoted at about a $17 per tonne discount to US FOB offers in the Gulf of Mexico for nearby shipment. With freight about $20 per tonne to the United States, it’s no wonder US buyers have reportedly already bought Brazilian cargoes for shipment this summer or fall.

Clipperdata is reporting the vessel Venezia anchored with estimated date for berth at the Port of Vila do Conde on June 20th. Some points of clarification, are in order, however. While the listed destination is the United States, it’s not guaranteed this vessel is heading there. Once loaded, satellite tracking is then used by us to verify voyage route and the ultimate destination. Furthermore, the “declared destination” of the United States could also mean Port of San Juan, Puerto Rico. The second factor seems unlikely in this event given that boats loaded in Brazil and headed to San Juan are typically Handysize while the Venezia is a Panamax. In addition, corn boats have loaded from this Brazilian port to the US Atlantic coast multiple times in 2018 and 2017.

Seasonally, we are on the cusp of an explosive loadout trend for corn out of Brazil. The 2017/18 marketing year is not a good comparative year for weekly load volumes given the cut in production for the country. The 2016/17 marketing year fits well with 2018/19 as production is similar. Week 26 loadouts in Brazil in 2017 totaled more than 700,000 tonnes and hit more than a million tonnes by week 29. Lineups for corn have increased in ports such as Santarem this week and we expect country-wide shipments to accelerate any day now. Because of this, US imports of Brazilian corn are likely to occur on the Atlantic Coast soon, Gulf of Mexico imports could be delayed due to flood-related issues on the lower Mississippi and US corn exports may very well nose-dive in the weeks ahead given the noncompetitive nature of pricing and increased exportable supply available in Brazil.

About The Author

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Matt is a Director of Commodity Research at ClipperData. Matt specializes in extracting key themes from technical and fundamental analysis of the global energy market, and communicating these through daily and weekly deliverables. He also provides oil and natural gas analysis and commentary to national and international media outlets that include CNBC, Fox Business, Russia 24, the Wall Street Journal, MarketWatch, AFP, Bloomberg, Reuters, and the Oil Daily. Prior to joining ClipperData, he worked for eight years at Schneider Electric / Summit Energy as a Global Commodity Analyst, where he also founded and authored the blog, Energy Burrito. He started his career at the Royal Bank of Canada in the UK, spending eight years with the bank. During that time, he managed $55 million in assets as a portfolio manager and financial analyst.