After suffering a drop in soybean yields due to a drought this past year, Brazil is now facing a large shortage in its corn harvest. While many farmers had planted the corn seeds during good weather conditions, more hot and dry weather hit Brazil causing the second harvest of crops that were in the process of forming to die out.
Farmers are struggling to keep up with demand during the 60 day drought period. Since the damage has already caused the crops to die out, they cannot be revived even if the drought ends soon. Past winter corn harvests have produced above 7.6 million tons, however the estimated production for this year is expected to be only 5.2 million tons at best.
After Brazil improved its farming technology, it experienced a boost in productivity, making the country the second-largest corn exporter in the world. Farmers have already resorted to cutting the corn to make silage, and are expecting losses in income due to the high production costs with the shortage in corn yields.
As a result of the shortage, corn prices have surged and are 147% higher than the five year average. Brazilian farmers have turned to the US, Argentina, and Paraguay for imports to keep up with demand. The government of Brazil has reduced taxes on corn imports from 8% to zero for the next six months in efforts to keep prices stable.