Jul 28, 2021

2020/21 Brazil Corn Estimate Lowered 2.0 mt to 86.0 Million Tons

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The 2020/21 Brazil corn estimate was lowered 2.0 million tons this week to 86.0 million and I have a neutral to lower bias going forward. The drought and frosts took a heavy toll on the corn and now the quality of the corn from Parana and Mato Grosso do Sul is going to be very bad. It is uncertain if farmers will be able to sell some of the poorest quality corn.

The safrinha corn was 39% harvested late last week compared to 53% last year according to AgRural. This represents an advance of 9% for the week. The harvest in Mato Grosso (72.7%) propelled the national percentage. The harvest in Parana and Mato Grosso is slow due to wet weather and high grain moisture. There are going to be a lot of quality problems in Parana and Mato Grosso do Sul because the some of the corn was frosted while it was still filling grain. There may be similar quality problems in Goias, Sao Paulo, and Minas Gerais.

The safrinha corn in Brazil was hit by three days of freezing temperatures last week. This was the second wave of freezing temperatures in southern Brazil in three weeks. In some areas the most recent frosts were even more harsh than those three weeks ago. More frosts are forecasted for southern Brazil this week and these frosts may be the worst of all.

If you look at the safrinha crop in general, yield losses range from 15% to 75% with very little of the corn attaining trend line yields. In south-central Brazil, yield losses continue to mount with the best fields yielding 30-40-50% less than normal. In the hardest hit fields, losses are in the range of 60-100%. Some of the corn that escaped the first series of frosts, were killed by the second series of frosts last week and more frosts are forecasted for this week.

The later planted corn was hit the hardest by the cold temperatures. If these frosts had occurred in the U.S. Corn Belt, it would be about the equivalent of three nights of frost in mid-July, then another three nights of even harder frosts the first week of August followed by more frosts the second week of August.

Bottom Line - The bottom line is that corn supplies in Brazil will be very tight through the end of the year. Last week, the price of Brazilian corn at the ports was in the range of R$ 78 to 82 per sack (approximately $6.95 to $7.30 per bushel), whereas corn from Argentina could arrive at Brazilian ports in the range of R$ 94 to R$ 96 per sack (approximately $8.37 to 8.55 per bushel) and corn from the United States could arrive at Brazilian ports in the range of R$ 98 to R$ 104 per sack (approximately $8.73 to $9.26 per bushel).

By the time U.S. corn reached hog producers in the interior of Santa Catarina, it would cost at least R$ 110 per sack (approximately $9.80 per bushel) compared to Brazilian corn reaching the same hog producers for R$ 98 to R$ 102 per sack (approximately $8.75 to $9.10 per bushel).

JBS Importing 30 Vessels of Corn from Argentina - The world's largest meatpacker JBS has already purchased 30 vessels of corn from Argentina with maybe more to come. The price of Argentine corn was 15 to 20 reals per sack cheaper ($1.30 to $1.75 per bushel) than the local prices in southern Brazil. Outside purchases already represent 25% of the corn they are using for feed, with volumes surpassing one million tons.

Aurora Alimentos Importing Corn from Argentina and U.S. - The food company Aurora Alimentos indicated that they intend to import corn from Argentina and the United States before the end of the year. The imports from Argentina will go to southern Brazil while the imports from the U.S. will go to northeastern Brazil. They did not indicate the amounts of imports.

Corn prices for September on the B3 Exchange in Sao Paulo reached R$ 101.40 on Monday (approximately $9.03 per bushel). Brazil could end up importing as much as 4 million tons of corn in 2021.

Conab Monitoring Frost Damage - Conab is running a special series of reports monitoring the impact of the frost on crops in south-central Brazil. Below are two pictures of the same corn field in Cambe in northern Parana taken by technicians from Conab of a corn field before the frost (Antes da Geada) and after the frost (Depois da Geada). Since those pictures were taken, there have been two more episodes of frosts in southern Brazil.

(Before the Frosts)(After the Frosts)

Mato Grosso Safrinha Corn - Farmers in the state had harvested 72.7% of the safrinha corn as of late last week compared to 86.6% last year and 80.7% average according to the Mato Grosso Institute of Agricultural Economics (Imea). This represents an advance of 20.8% for the week. The most advanced harvest is in the mid-north part of the state where 88% of the corn has been harvested. The slowest harvest pace is in the southeastern part of the state where 45% of the corn has been harvested.

Corn yields continue to be highly variable in Mato Grosso and the final statewide yield might be down 15% from initial estimates.

Parana Safrinha Corn - In the municipality of Pato Branco in southwestern Parana, yield losses are expected to be in the range of 50% according to the President of the Rural Union of Pato Branco. The corn was planted late, and farmers had low expectations for the corn due to the drought with yields in the range of 80 sacks per hectare (76.3 bu/ac). The yield estimates have now declined to about 40 sacks per hectare after the frosts (38 bu/ac).

As of today, the safrinha corn in Parana is 15-20% harvested. The Department of Rural Economics (Deral) indicated earlier last week that 4% of the safrinha corn was pollinating, 37% was filling grain, 59% was mature. The corn was rated 46% poor, 44% average, and 10% good. Farmers are reporting very slow dry down of the corn and high grain moisture which could lead to quality problems.

Mato Grosso do Sul Safrinha Corn - The safrinha corn harvest should start in the municipality of Maracaju in southern Mato Grosso do Sul this week. The safrinha corn has had problems from the start with late planting, a drought, and then early frosts. Yields that are usually in the range of 90 to 100 sacks per hectare (86 to 5 bu/ac) are now in the range of 52 sacks per hectare (50 bu/ac). The latest planted corn has been impacted the most.

Before the corn was planted, farmers were forward contracting their corn for R$ 35.00 to R$ 40.00 per sack (approximately $3.10 to $3.60 per bushel). The current piece of corn is in the range of R$ 90.00 per sack (approximately $8.00 per bushel).

Minas Gerais Safrinha Corn - The safrinha corn in Minas Gerais is 10-15% harvested and yield losses are already apparent. According to the President of Aprosoja-MG, the yield of the safrinha corn in the state will be approximately 50% of normal. The average corn yield in the state is about 80 sacks per hectare (76 bu/ac) for non-irrigated corn and 110 sacks per hectare (105 bu/ac) for irrigated corn. Yields for the non-irrigated corn this year will be in the range of 20 to 30 sacks per hectare (19 to 29 bu/ac) with the best fields yielding in the range of 40 sacks per hectare (38 bu/ac).

Farmers who may not be able to meet their contracts to deliver corn might opt to plant full-season corn instead of soybeans in the next few months in order to fulfill their contracts.