The price of corn in Santa Catarina reached R$ 70.50 in two different markets on October 2nd. “When, at the end of August, we said that we would not be surprised if the price reached R$ 65.00 at the end of September and R$ 70.00/bag in October and eventually R$ 75.00 in November, we did not imagine that our forecast would turn out come to fruition sooner than we anticipated”, points out TF Agroeconomic.
“And the question remains: does corn have a chance of rising further? We continue to believe so”, points out TF’s team of market analysts, who highlight the following factors:
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a) Scarcity of offers reached practically all consuming states, with offers being restricted to the states of the Brazilian Center-West (MS/MT and GO, mainly) that supply RS, SC and SP, but at high prices, since the prices at origins are also rising, to which freight must be added;
b) The more you buy from the Central-West states (inelastic demand), the less availability becomes (elastic supply) and the more prices rise. Now, corn prices in the Dourados region are already, according to the Cepea average, around R$ 55.00. If the average freight of R$ 11.00/bag is added, maize from Mato Grosso would arrive in Rio Grande do Sul at around R$ 66.00, at the beginning of October. As shown below (see MS), this week lots were negotiated not only for the domestic market, but also for export, reducing availability and increasing the possibility of an increase in local prices.
c) As we already take it for granted that the price will reach R$ 70.00/bag in RS and SC in the first half of October, it is likely that it could gradually rise to R$ 73.00 by the end of the month and we see a great chance of it reaching R$ 75.00/bag in the month of November, when there will still be no availability of the summer harvest and the previous winter harvest will have very reduced availability.
d) Finally, with farmers heavily capitalized on the excellent profits from soybeans, corn and wheat this year, they do not feel pressured to sell and can expect better prices.
Source: agrolink
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