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Corn
As Ukraine's corn exports are currently restricted due to the war, China seems to be looking for other suppliers in the world market. In that regard, Brazil could be a good candidate to be an alternative supplier for the remainder of the 2021/22 marketing year, as well as in the new 2022/23 crop as production has recovered from the previous cycle and exportable supply is expected to be sufficient until the end of the calendar year. Moreover, production and exports for the new season are forecast at a new record level.
On May 23, China and Brazil announced that they had signed a protocol on phytosanitary requirements, which would allow the export of Brazilian corn to China. However, in the event that large volumes are negotiated, a reconfiguration of global trade flows of the grain could be expected.
Soybeans
Both soybean oil and crude oil have exhibited dramatic price increases throughout 2022. Precisely, at the beginning of June, soybean oil prices have risen by more than a third in the United States and by 20% in South America. This is occurring in parallel with the increase in oil prices, which rose by 45% in the same period.
In the first decade of the 2000s, rising energy prices were the main driver of vegetable oil prices. However, the current situation is different, as the increase in oil values reflects the shortage of world supply, which is a consequence of the droughts that affected production in Canada and South America, together with the events occurring in Ukraine and the trade restriction policies in some countries, this has reduced the stocks available for export. Although neither market is directly affecting the prices of the other, higher energy values could eventually push soybean prices even higher, as their consumption for energy use would be promoted.
Written by Economic Analysis Department of 333 Latin America with data from: USDA | United States https://apps.fas.usda.gov/
