Brazil to start shipping corn to China in December

Nov, 22, 2022 Posted by Gabriel Malheiros

Week 202247

Brazilian companies are negotiating the first corn exports to China, a recently opened market for the South American country, says the executive director of the Abramilho industry association Glauber Silveira. There is no confirmation of signed contracts as of year. However, the authorizations already granted by Beijing are enough for companies to close deals, he says.

“That market is now open, and when this happens, we are allowed to start exporting. We have a list of more than 150 companies in Brazil authorized to negotiate in this first wave,” says Silveira, referring to the list released by the Chinese customs, which includes everything from cooperatives to large multinationals.

China’s green light to buy from Brazilian companies has been moving companies and cooperatives, which have been preparing to serve this new market. C. Vale, headquartered in Palotina, in western Paraná state, is one of them. The cooperative is systematizing the necessary documentation to register with the Ministry of Agriculture and be able to export to the country.

“We have no future commitments signed, but the cooperative is currently taking the necessary steps to handle these exports. This usually happens in quick succession,” says Alexandre Tormen, manager of C.Vale’s Operations and Market Department.

Supply and demand

Analyst Matheus Pereira, director of Pátria AgroNegócios, says he believes that the first shipments should depart later this year, in December. By then, the market should feel the impact on the number of total corn exports from Brazil.

“Today, the country exports something around 44 million, 45 million tonnes – it’s a record for corn exports in Brazil,” he says. These figures take into account the grains that have already been committed to exports and sold for the next 45 days, leaving a surplus of 35 million tonnes.

According to Ministry of Agriculture projections, China will import approximately 18 million tonnes of corn in the 2022/2023 crop year. The National Supply Company (Conab) forecasts total Brazilian exports at 45 million tonnes.

“If China confirms imports, which is very likely,” Pereira says, “we will increase our projection by 5%, with 1.5 million to 2 million tonnes more this year. Then it will continue to go up. This is a market that gradually opens up,” says Silveira of Abramilho.

Corn supply and demand in Brazil

Domestically, the beginning of corn exports to China is not seen with great concern by buyers of Brazilian grain. Earlier this month, in a videoconference, BRF executives assessed that shipments should not have much influence.

“We understand that this (the Chinese importing Brazilian corn) should not have an impact on prices because, in relative terms, there will be no change from the current ratio between total exports and total harvest yields,” said Fábio Mariano, Vice President of Finance and Investor Relations at the time.

Phytosanitary requirements

Glauber Silveira explains that the protocol for corn exports to China lays out rules applicable from the time the crop is planted. However, to make shipments possible this year, China waived phytosanitary requirements for exporting Brazilian corn, given that many requirements could no longer be met with the harvest in progress.

However, the Ministry of Agriculture considers compliance with Chinese conditions and quality standards when approving exporters and port warehouses to trade grain with China. Silveira emphasizes that the Brazilian producer employs control measures and is constantly receiving guidance, given that Brazil already exports corn to countries such as Japan, Egypt, and Greece.

Alexandre Tormen, manager of C. Vale, points out that an essential point in this new commercial relationship with China is that grain production grows slower than domestic consumption. “This opens up a positive perspective for the coming years,” he analyzes.

Matheus Pereira, from Pátria AgroNegócios, comments that Brazilian corn is more internationally competitive than other countries products. “We gained space purely on price; the corn here is significantly cheaper than the grains sold by our competitors,” he observes. “We are nearing the end of the fiscal year. We shall see shortly is only a taste of what’s to come in 2023, when China should become more aggressive, given the country’s domestic production for the pig feed chain, which is in high demand. There is plenty of opportunity for commercial interaction with Brazil,” he adds.

Source: Globo Rural

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