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Resumption of exports in Ukraine could reduce grain prices in Brazil, says consultancy

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Resumption of exports in Ukraine could reduce grain prices in Brazil, says consultancy

A projection made by Safras & Mercado, the largest consultancy in the field in Brazil, at the request of CNN points out that agricultural grains can be up to 34% cheaper for Brazilian consumers by the end of 2022.

The cheapening of inputs within the country is a consequence of the lower need to export national grains, since the world market has once again counted on a great seller of corn and wheat: Ukraine.

In just ten days after Russia and Ukraine signed an agreement to reopen ports, the price of wheat registered a 17.2% drop. And the projection made by Safras & Mercado is that the value of the product will fall another 16.9% until December.

In absolute terms, in July, a ton of corn cost R$ 2 thousand. For December, the trend is for the same ton to cost approximately R$ 1,600.

Ukraine is the 4th largest grain exporter in the world, behind the United States, Argentina and Brazil. The unblocking of Ukrainian ports is considered essential to ensure global food security.

The liberation of the ports takes place more than five months after the beginning of the war. On the morning of last Monday (1st), the first Ukrainian grain transport ship left the port of Odessa, in southern Ukraine.

According to the local government, the vessel was loaded with 26,000 tonnes of Ukrainian corn.

“The trend is that the sector will benefit greatly, if the agreement between Ukraine and Russia is maintained, and the grains continue to be sold. The war brought many uncertainties to the world, and made the price of these commodities explode. This is the first step to begin to see relief,” said grain specialist Elcio Bento.

However, according to the consultancy, it is not yet possible to say that the prices of the products will be fully restored, as there is uncertainty for the coming months.

For Elcio Bento, at this moment, the market is already eyeing the 2023 harvest, which could be threatened by the war in Eastern Europe.

“The beginning of the planting of these crops starts all over the world between September and October, for the grains to be harvested the following year. Will Ukraine, at war, be able to plant? The planting that is being exported from the country now was done before the beginning of the war, in October 2021. This brings insecurity no longer for this year now, but for 2023”, concludes Bento.

Increase in grain production in Brazil

Grain production in Brazil is expected to reach 272.5 million tons in the 2021/2022 harvest. The volume is 6.7% higher compared to the previous season. The data are from the National Supply Company (Conab).

An increase of 4 million hectares of area is also expected, which should remain at 73.8 million hectares. What explains the positive result is the favorable weather condition.

The corn harvest is estimated at 115.6 million tons, a volume 32.8% greater than the last cycle.

Like corn, sorghum, a grain used in the preparation of animal feed such as chicken, also tends to record production records, with an estimated harvest of 3 million tons.

In relation to beans, the estimate is that production will reach 3.1 million tons.

Rice and soybeans will have a harvest of 124 million and 10.8 million tons, respectively.

Wheat gains prominence in the winter crop and should reach a new record, reaching 9 million tons.

Grain growth reaches 75% compared to the 2019m crop when production of 5.1 million tons was recorded.

Source: CNN Brasil

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