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Brazil’s corn exports have been supercharged by rapidly rising Chinese demand. It is likely that South America’s largest economy could surpass the US as the top corn exporter for the first time this year, marking a massive shift in grain markets. If anything holds Brazil back, it might be a relatively late planting for its second corn harvest, known as safrinha, as well as lingering effects of the recently dissipated La Niña climate phenomenon. 

Precipitation in Brazil’s grain-growing heartland over the next month could play an outsized role in determining the trajectory of corn futures in the year ahead. If the Brazilian crop is strong enough, it may even be able to partially offset an underwhelming harvest year in neighboring Argentina.

Related Funds: Teucrium Corn Fund (CORN), Invesco DB Agriculture Fund (DBA)

South American crop production is growing and could herald a marked change in the arrangement of corn markets this year, with Brazil potentially taking the top spot among exporters. DTN notes that the US Department of Agriculture (USDA) expects Brazil to achieve a second consecutive year of record corn shipments in 2023, shipping 50 million metric tons (mmt) of corn to destinations around the world, a sevenfold rise across the past 15 years. By contrast, the US is expected to ship 47 mmt of corn for the 2022-23 marketing year. Brazil’s recent growth has been facilitated by a 2022 trade deal with China. Analysts expect 6 mmt to 10 mmt of the Brazilian corn crop could go to China exclusively, serving as the primary catalyst for Brazil overtaking the US as the world’s largest corn exporter.

Throughout the past 20 years, the University of Illinois notes that corn acreage in Brazil has risen 72%, versus a 12% increase in the US. Even if Brazil doesn’t manage to surpass US export capacity for corn this year, the USDA’s Economic Research Service says Brazil has another 49 million acres of land it can use to expand crop production by 2031, which will help South America’s largest economy…

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