Frost rekindles Brazil corn fears as B3 hits limits

Frost across parts of Brazil’s corn producing states, and expectations of heavier frosts to come in the days ahead, have...

Frost across parts of Brazil’s corn-producing states and expectations of heavier frosts to come in the days ahead have sent corn futures on primary domestic exchange B3 to limit up for a second consecutive day, trade sources told Agricensus Tuesday.

“B3 is on the maximum high limit for the first (prompt) contracts. We woke up with lots of corn with frost images running the market. The forecasts shows that tomorrow will be even worse,” one Brazil-based trade source said.

The front-month July, September, November 2021 and January 2022 contracts all hit the 5% trading limit at Monday’s close as fears mounted that a significant proportion of this year’s late-planted corn crop could now face risk from the cold.

In early trading on Tuesday, the contracts again raced to the 5% limit.

Weather data from Maxar shows temperatures are expected to be up to four degrees Celsius below seasonal norms (8 degrees F) across much of the main producing regions over the next five days, with the peak of the cold wave expected on Wednesday.

This year’s Brazilian corn crop has already been hit hard by delays to the soybean planting programme followed by prolonged hot, dry weather.

That slashed production outlooks from around 110 million mt to now stand at around 96 million mt, with some analysts calling for even lower figure.

But the danger of planting corn late meant that key development stages for the fledgling crops would likely be pushed back into colder, cooler weather – raising fears of exposure to cold and frost, with some talking of heavy crop losses ahead.

“The market is worried about contract breaches; crop losses will be higher than 60% in the state of Paraná,” Victor Martins, hedge advisor at Hedgepoint Global Markets, told Agricensus.

“People are already referring to the ‘D Wednesday’ when more frost is expected,” a broker told Agricensus, although after developing under dry conditions, much of the damage is already done.

“This week’s frosts will impact mainly the latest planted areas, most of the safrinha crop loss will be due to dry and warm weather conditions during the months prior,” Martins said, estimating as much as 70% of the crop has been hit by dry conditions, meaning the balance is now impacted by frost.

“There is no widespread talk of higher imports as yet, but I do not rule out rising Argentinian imports,” the broker source said as Brazil strives to plug holes in its domestic corn supply.

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