With harvest significantly behind schedule for Brazil’s safrinha crop, farmers there suffered a 1-2 punch on Thursday when prices fell to $3.
Iowa farmer Matthew Kruse, who also operates in Brazil, reports farmers so far are harvesting high yields.
“Now the issue with that is it's collapsing the cash market in Brazil because you have this massive crop coming online right now,” Kruse says. “And so prices have dropped to like $3 dollars, $3.10 right now, cash corn in central Mato Grosso. You know, back in March they were like $5.30.”
That’s also disappointing news for U.S. producers.
Low prices in Brazil, Kruse notes, “makes their price potentially much more competitive with us.”
With the U.S. hope for better prices largely contingent on demand, Kruse says, “I think you’re going to see exports begin to struggle.”
The question is what the final numbers will be for the safrinha crop that pundits suspect could be even higher than USDA and CONAB projected. Yields on a well-watered crop are high, but harvest is significantly behind and later planted fields didn’t get the same rainfall.
“As we're closing out the month of June harvest in Brazil and the second crop corn is beginning to pick up, they're probably getting close to about 20% complete, which is quite a bit behind schedule where they're usually at,” Kruse says. “They're usually about 50% complete by July 8 and I don't think they're going to make that this year.”
Time will tell, Kruse says, as he offers additional anecdotal reports from South American farmers.
“I think they're maybe putting the cart a little bit ahead of the horse because some of those initial yields are quite a bit higher than what's planted later,” Kruse says.