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Blog by Keith Good, University of Illinois

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Earlier this week, in its monthly Grain: World Markets and Trade report, the USDA's Foreign Agricultural Service (FAS) stated that, "Brazil corn imports (Oct-Sep) are forecast at 2.6 million tons for 2020/21.

If realized, it would be the largest volume on record.
"The forecast volume reflects strong domestic prices amid worsening prospects for the second crop corn. Prices have run up to a record level in the southern states, where poultry and swine production is concentrated.

Grains: World Markets and Trade. USDA- Foreign Agricultural Service (July 2021).

"To help cool down prices, the government issued a decree in April exempting the 8 percent import duty on corn from outside of MERCOSUR countries through the end of 2021. There is no limit on import volumes under the decree."

FAS explained that, "Corn imports have been primarily from Paraguay and Argentina due mainly to lower prices relative to domestic corn. Imported corn has been mainly destined to the states of Parana, Santa Catarina, and Rio Grande do Sul in the South. It is costly to move corn from production areas in the Center-West to feed users in these southern states. Also, facing a complicated interstate tax system, feed users in the southern states prefer importing from neighboring countries."

Grains: World Markets and Trade. USDA- Foreign Agricultural Service (July 2021).

However, the Grains report noted that, "Imports of U.S. corn have been insignificant reflecting in part the differences in biotech regulations. In June, Brazil approved the remaining genetically engineered corn event clearing the path for U.S. exports. However, it seems unlikely that Brazil will purchase an appreciable amount of U.S. corn in the short term given high U.S. corn prices as well as logistical advantages enjoyed by Paraguay and Argentina."

With respect to U.S. crop prospects, Reuters News reported earlier this week that, "The U.S. government raised its forecast for the country's corn harvest on Monday, topping the average of analysts' estimates despite some concerns about dry conditions in key growing areas during June.

"The outlook for soybean harvest was left unchanged although that crop is still in early stages of development."

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