{"id":1115,"date":"2019-02-20T12:43:22","date_gmt":"2019-02-20T12:43:22","guid":{"rendered":"http:\/\/commodityconversations.com\/wordpress2\/?p=1115"},"modified":"2019-02-27T08:56:48","modified_gmt":"2019-02-27T08:56:48","slug":"analysis-irans-corn-need-key-as-brazils-export-import-flow-up-ended","status":"publish","type":"post","link":"https:\/\/commodityconversations.com\/wordpress2\/2019\/02\/20\/analysis-irans-corn-need-key-as-brazils-export-import-flow-up-ended\/","title":{"rendered":"AgriCensus Report"},"content":{"rendered":"\n

ANALYSIS: Iran\u2019s corn need key as Brazil\u2019s export, import flow up-ended<\/strong><\/h3>\n\n\n\n

Brazil\u2019s position as one of the few exporters prepared to run the gamut of US sanctions and supply corn to Iran is helping to upend the country\u2019s export dynamics, as geopolitics, trade fears and economics sees southern states exchange Brazilian corn for Argentine imports.<\/p>\n\n\n\n

\u201cThe crazy thing is that ports in the states of Rio Grande do Sul and\n Santa Catarina are exporting corn this month \u2013 this is not normal at \nall,\u201d one market source told Agricensus.<\/p>\n\n\n\n

The news comes as the same states \u2013 which are home to a significant \nchunk of Brazil\u2019s livestock sector \u2013 have imported corn from Argentina \nin recent days, in a move that often reflects Brazil’s high domestic \nprices and poor internal supply logistics.<\/p>\n\n\n\n

\u201cThe state of Santa Catarina normally buys some corn from Argentina \nand Paraguay because those countries are close, because Santa Catarina \nneeds more corn than it is able to grow and because it\u2019s cheaper to buy \ncorn from those countries,\u201d Agrural\u2019s Daniele Siqueira told Agricensus.<\/p>\n\n\n\n

Santa Catarina is too far south to have a second safrinha crop, where\n much of Brazil\u2019s corn supply comes from, but is too far away from the \nbig producing states of Mato Grosso and Parana to make supply logistics \ncost effective.<\/p>\n\n\n\n

While it is not unusual for Argentina to supply corn to Brazil, the \nfact that the states are also exporting corn draws together disparate \nthreads of trade war, Iran sanctions, Argentina\u2019s record-breaking crop \nand Brazil\u2019s domestic situation.<\/p>\n\n\n\n

Southern star<\/strong><\/p>\n\n\n\n

Line-up data for Brazil\u2019s principle ports in Santa Catarina and Rio \nGrande do Sul \u2013 Rio Grande and Imbituba \u2013 shows nearly 650,000 mt of \ncorn either loaded, loading or recently sailed.<\/p>\n\n\n\n

\u201cFarmers harvest soybeans later in those states and ports don\u2019t have much to do right now\u2026 (but) they were not supposed to export corn, because their domestic market needs corn,\u201d Siqueira said.<\/p>\n\n\n\n

While the bulk is bound for Vietnam from Rio Grande, the port is also host to one cargo heading to the Middle East country, while Imbituba\u2019s line-up is dominated by corn cargoes to Iran \u2013 with 197,122 mt set to sail.<\/p>\n\n\n\n

Geopolitics<\/strong><\/p>\n\n\n\n

Which is where geopolitics kicks in \u2013 Iran has been increasingly reliant upon Brazilian corn supply since US president Donald Trump re-imposed sanctions on the country in December 2018.<\/p>\n\n\n\n

That has seen some of the country\u2019s auxiliary suppliers \u2013 countries \nsuch as Ukraine \u2013 show a degree of wariness about selling to Iran, \nfearing a backlash from the US.<\/p>\n\n\n\n

That has consolidated Brazil\u2019s position as the country\u2019s number one \ncorn supplier, and left Iran having to pay a substantial premium to \nsecure supply.<\/p>\n\n\n\n

\u201cThey are exporting to expensive destinations\u2026 the domestic market is\n equivalent to 120 cents over the March futures contract,\u201d a second \nBrazil-based market source said.<\/p>\n\n\n\n

That equates to around $194\/mt, at a time when Argentina\u2019s FOB Up \nRiver price stands at around $167.75\/mt, according to Agricensus data \u2013 \nweighed down by expectations of a 46 million mt corn crop that is poised\n to come to market from March onwards.<\/p>\n\n\n\n

While the financial reward is clear, the use of southern ports versus\n the typical main export hubs of Santos or Paranagua comes down in part \nto the timing of the soybean harvest and the ongoing strained trade \nrelations between the US and China.<\/p>\n\n\n\n

With Brazil\u2019s soybeans are harvested as part of the country\u2019s first \ncrop, logistics typically switch towards soybeans at this time of the \nyear \u2013 but China\u2019s ongoing trade impasse with the US has added an extra \nincentive, and Brazil is gearing up for a big bean export performance.<\/p>\n\n\n\n

Again, line-up data shows 89 ships are either waiting to load, \nloading or have recently sailed from Brazil\u2019s main export hub of Santos.<\/p>\n\n\n\n

Of these, only two are carrying corn, with 71 of the ships \u2013 some 80% \u2013 taking soybeans.<\/p>\n\n\n\n

That leaves the southern states at a unique crossroads – meeting Iran’s supply needs through Brazil’s corn exports, while capitalising on competitive Argentine corn to meet its own needs. <\/p>\n\n\n\n

\"This<\/figure>\n\n\n\n
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