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Brazil set to become the second largest global exporter of maize, says FAO

Brazilian maize exports for the 2019/2020 season forecast to reach 29.5 million tonnes.

Over the past decade, Brazil’s maize production and exports have undergone a terrific boom:

13th May 2019, Santiago, Chile - Early indications for the 2019/20 trade season point to maize exports from Brazil rising to 29.5 million tonnes, some 15 % higher than in 2018/19, according to FAO’s latest Food Outlook.

This would place Brazil as the second largest maize exporting country in the world, after the US.

According to the FAO report, over the past decade, Brazil’s maize production and exports have undergone a terrific boom: Total production increased from just under 52 million tonnes in 2007/08 to nearly 98 million tonnes in 2017/18.

This growth in output has enabled the country to increase its maize exports almost continuously, reaching 36 million tonnes in 2015/16, a season when it captured almost 26 % of global market share. This compares with just 6 million tonnes exported a decade earlier, which represented less than 1 % of the global total.

Indeed, Brazil became –for a time– the world’s largest maize exporter in 2012/13, when severe drought damaged the maize crop in the US.

Maize shipments from Brazil to Asia have jumped from 1.5 million tonnes in 2007/08 to a peak of 27 million tonnes in 2015/16, making notable inroads into important markets such as the Islamic Republic of Iran, Japan, the Republic of Korea, Vietnam and Malaysia.

In Africa, where Brazil’s maize exports expanded from zero to just under 5 million tonnes in less than a decade, some 30 countries have become customers of Brazilian maize, led by Egypt, Morocco and Algeria.

Reasons behind the rise

According to the FAO report, new maize varieties, expansion of production to higher-yielding regions of Mato Grosso, the country’s climatic ability to produce two crops in the same year, geographical shifts in livestock feeding and targeted government support are among the key factors that have contributed to a rapid rise in Brazil’s maize production over the past decade.

Developments in currency markets also contributed to the robust expansion of maize exports from Brazil. Continued weakening of the national currency (Real) helped exporters to remain competitive and expand their markets well beyond neighbouring Latin American countries to Asia and Africa.

Infrastructure has been key

Another factor contributing to Brazil’s emerging role as a leading world exporter of maize during the past decade is the strong government-backed investment strategy to develop ports and transportation infrastructure.

Changes in the country’s regulatory framework have favoured public-private partnerships in road and rail expansion, as well as in port capacity improvements. In particular, new

developments in the centre-west agricultural frontier, where more than two-thirds of the country’s soybeans and maize are produced, have boosted the transport of commodities to the north (involving a much shorter distance than to southern ports), thereby lowering export costs and delivery time In recent years, new terminals have become operational in the so-called Northern Arc port area. This has boosted the region’s share of grains transportation.

In 2017/18, shipments from these ports reached 10 million tonnes, representing a sharp rise from less than 0.5 million tonnes registered in 2011/12. Indeed, while the northern terminals transported 9 percent of total maize exported from Brazil that year, this share rose to 34 percent in 2017/18.

The new terminals in the north provide much better market opportunities for buyers in Central America, Asia and Africa, reducing shipping costs and increasing the competitiveness of maize produced in Mato Grosso, Tocantins and Pará, all important producing areas in the north and northeast of the country.

A change in the seasons

Brazil’s maize exports have also shifted their seasonal pattern. Initially, maize shipments remained small, and generally took place during the early months of the season. However, since 2010 an increasing share of maize has been exported from August to January, which coincides with the months when harvesting of the second-crop maize (safrinha) begins, when supplies are normally at their peak in the northern hemisphere– a development that has generated stiffer competition with other major exporters, in particular the US.

In fact, March-July shipments from Brazil remain relatively small (representing just over 2 % of annual exports), while the period from August to January now accounts

for the largest share of country’s trade activity, with monthly exports making up more than 12 % of the total during this period.

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