45
Contrary to what one would expect,
not even the arrival of the corn harvested
in the second crop, as of June 2016, rep-
resented a sense of comfort relative to the
capacity for supplying the Country in 2016
and equally, very likely, in 2017. As early
as June, the National Food Supply Agency
(Conab) was pointing to a reduction of 8.5
million tons in the 2015/16 growing sea-
son, due to the fight for space for soybean,
along with adverse weather conditions in
representative regions. Brazil was not sup-
posed to repeat – nor would outstrip –
the record 84.6 million tons harvested in
the 2014/15 growing season, which was re-
sponsible for the all-time record exports of
30.7 million tons in 2015.
“With the record supply in 2015, pric-
es were prone to plummet. However, with
higher exports, they moved in the oppo-
site direction, and “escalated”, says Ru-
bens Augusto de Miranda, researcher at
Embrapa Corn and Sorghum Economy
Department, in Sete Lagoas (MG). It was a
clear consequence stemming from supply
lagging behind demand. According to him,
the present scenario of high prices derives
from exclusive Brazilian factors. “The de-
preciation of the currency that took place
in the second half of 2015, depressed the
prices of Brazilian corn, compared to the
competitors in the international market-
place”, he clarifies. Due to this, from July
to December 2015, shipments amounted
to 23.6 million tons of the cereal.
Foreign demand for Brazilian corn con-
tinued on the rise throughout 2016. Ex-
ports totaled 12.2 million tons from Jan-
uary to May, much above the 5.2 million
tons shipped abroad in the same period in
2015. This volume represents more than
half of the exports estimated at up to 23
million tons for 2016, according to the
National Association of Cereal Exporters
(ANEC). In the meantime, corn supply will
be lower and the 2015/2016 growing sea-
son is estimated to reach a crop 8.5 mil-
lion tons smaller, while the smaller stocks
pushed up the price of the kernel even
further. “In 2016, average prices for a 60
kg sack increased by 51%. If we take into
consideration the past 12 months, price in-
creases reach 113%”, says Miranda.
The Embrapa researcher observes that,
in light of this price scenario of unprece-
dented increases, the “invisible hand” of
Adam Smith [1723-1790, British econo-
mist, known as “father of modern econom-
ics”, who developed theories in support of
economic liberalism] has entered into op-
eration to balance offer and demand before
the set time. As Smith suggested, soaring
supplies lead to depressed prices, benefit-
ing humanity. In other words, tight sup-
ply pushes up the price of the product and
stimulates increases in production.
The present high prices of corn are sup-
posed to work as extra stimuli for the farm-
ers to grow a bigger crop in the 2016/2017.
Taking it that demand will not change, it
would result into plummeting prices in the
said season. “The fact is, in the globalization
era, a year is much time. Faster adjustments
are not only necessary, once they have al-
ready been put into practice”, he concludes.
