Chinese buyers have made another big purchase of U.S. corn for the next harvest as concerns mount over the impact of dry weather on Brazil.

The USDA on Monday announced a 1.02 million-metric-ton sale of corn to China for delivery in the 2021-22 marketing year, which follows a Friday announcement of a daily export sale of 1.36 million tons of U.S. corn to China – a report that was well-received by representatives of the U.S. corn sector, who stressed that the purchases for 2021-22 show that Chinese demand is not slowing.

One factor emphasized by U.S. officials is the news from Brazil that the country will likely not have as much of the grain this year as expected because of growing drought conditions.

“Supply is going to drive the price,” said Lesly McNitt, director of public policy and trade for the National Corn Growers Association. “The demand is there in China and they want to insure they have the supply. The signals out of Brazil suggest that supply is going to tighten, so that could continue to impact price.”

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One of those signals comes from AgRural, a consulting firm in the southern Brazilian state of Parana.

The drought conditions that plagued the major producing region in Brazil’s center-south persisted through the first week of May, according to the firm, which has cut its corn production forecasts.

AgRural, which combined its data with new government forecasts, says Brazil’s second-crop corn – the “safrinha” – is now only expected to reach 69.6 million tons. That’s down from an earlier forecast of 77.5 million tons and last year’s production of 75.1 million tons.

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