23
I
n 2016, the corn market witnessed lots
of contrasts and the impacts of these dy-
namics reflect on the 2017/18 commer-
cial year and on the planted area in the
2016/17 crop year. According to the Cen-
ter for Applied Studies on Advanced Eco-
nomics (Cepea), of the Luiz de Queiroz Col-
lege of Agriculture (Esalq), a division of the
University of São Paulo (USP), the anticipa-
tion of the end-of-season negotiations and
the failure of the 2015/16 crop, which result-
edintothesmallestproductionvolumeover
thepastfiveyears,pushedupdomesticpric-
es throughoutmost of 2016.
The higher prices resulted into chang-
es to the dynamics of the market of the ce-
real: regional prices kept away from nation-
alandinternationalreferences,andreduced
competitiveness. In consequence, exports
receded, while international purchases
soared in the secondhalf of the year. The ex-
change rate relation played a relevant role.
In 2016, the corn prices indicator Es-
alq/BM&FBovespa, regarding the region
of Campinas (SP), rose 3.6%, to R$ 38.17
per 60-kg sack, on December 29. Its peak
in the first half of the year occurred when it
reached the nominal record in early June:
R$ 53.91 per 60-kg sack, up 46.4% in the first
half of 2016. Over the year, average prices
were up 53.1% from2015.
Corn prices reached record peaks in all
regions under the supervision of the Cepea.
Prices soared due to shrinking supplies, re-
flecting the small initial stock in the 2015/16
season (down 16%fromthe previous season)
and the 14.3 percent smaller summer crop
(which,accordingtoConabsources,amount-
ed to 25.85 million tons). A 12.3 percent re-
duction in planted area is expected. The
farmersopted for soybean, at that period.
January through June, Brazil exported
12.3 million tons of corn, volume that out-
strips by far the 5.3 million tons shipped in
the same period in 2015. The high prices in
the first half of the year, in turn, prompted
an increase of 10.3 percent in the nation-
al area planted with corn in the 2015/16
growing season – the biggest on record up
to that time. Nonetheless, delayed seeding
in the Center-West and unfavorable weath-
er conditions – warm and dry from March
to May – adversely affected productivity,
whichwas down 31.7 percent fromthe sec-
ond crop in the previous season.
As harvest progressed, the failure of the
second crop was confirmed. If in April 2016
Conab sources were pointing to a produc-
tion of 57 million tons, harvest resulted into
40.7 million tons, down 24.7 percent from
the 2014/15 growing season. Such a scenar-
io pushed up corn prices in the second half
of the year in the physical and future mar-
kets, in the first half of June.
In the second half of June, when harvest
started, for the first time prices fell in the na-
tional spot, in spite of the expected crop fail-
ure, a trend that kept going until mid-July. In
viewofthis,thenationalnegotiatorsturnedto
the attractive domestic market. By late July,
prices went up, for fear of supply failures over
thefinalremainingmonthsoftheyear.
n
Price-
driven
High prices in the first half of 2016
wereresponsibleforthe10.3percentincreaseinthe
plantedarea,andpromptedaleapinnationalproduction
