Aug 03, 2021

2020/21 Brazil Corn Estimate Lowered 2.0 mt to 84.0 Million Tons

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

The 2020/21 Brazil corn estimate was lowered 2.0 million tons to 84.0 million and I have a neutral to lower bias going forward.

The 2020/21 safrinha corn in Brazil was 49% harvested late last week compared to 61% last year according to AgRural. This represented an advance of 10% for the week.

What has been harvested thus far is probably the best yielding safrinha corn. It was the corn that was planted first, especially in Mato Grosso. What still needs to be harvested is the safrinha corn planted last, which was the most impacted by the drought and numerous frosts. There continue to be reports that some of the safrinha corn may not be harvested at all due to the plants being killed during pollination or shortly after pollination. A lot of the late planted corn is expected to be poor quality. We won't know the full extent of the damage until all the corn is harvested.

Mato Grosso Safrinha Corn - The safrinha corn in Mato Grosso was 84% harvested as of late last week compared to 93.5% last year and 90.7% average according to the Mato Grosso Institute of Agricultural Economics (Imea). This represents an advance of 11.4% for the week. The most advanced harvest pace is in the mid-north region where 95% of the corn has been harvested. The slowest harvest pace is in southeastern Mato Grosso where 60% of the corn has been harvested.

The Mato Grosso Institute of Agricultural Economics (Imea) is currently estimating the statewide corn yield at 95 sacks per hectare (90.6 bu/ac), but they indicated that it might decline further as farmers harvest the later planted safrinha corn that was impacted the most by prolonged periods of dry weather.

Deral estimates the out-of-pocket cost for the 2021/22 safrinha corn crop in the state at R$ 2,069 per hectare or approximately $164 per acre. Given a yield of 90 bu/ac, that equates to approximately $1.82 per bushel.

Historic Losses for Parana Safrinha Corn - The Department of Rural Economics for the State of Parana (Deral) lowered their estimate for the 2020/21 safrinha corn production again last Thursday. They are now estimating the state's safrinha corn production at 6.1 million tons, which is down 3.7 million tons from a month earlier and 58% below the 14.6 million estimated at the start of the growing season.

The crop estimate had already been lowered due to a historic drought during most of the crop's development. The crop was hurt even more by two episodes of frosts/freezes during late-June and July when the corn was filling grain. Since the report was issued, there has been another wave of freezing temperatures to sweep across the state, so their production estimate may decline even further in subsequent reports.

These are historic losses (a loss of 8.5 million tons) for the safrinha corn crop which is the primary corn crop in the state. It is the equivalent of losing three years of full-season corn production, which usually produce about 3 million tons per year.

Deral reported that the average corn price in the state last week was R$ 92.04 per sack (approximately $8.20 per bushel). This was 17% higher than the end of June and 124% higher than the same time last year.

Deral stated that Brazil will probably import a record amount of corn in 2021, and it is too early to say if Brazil will run out of corn. Some export contracts have been washed out in favor of selling to the domestic market, so if enough export contracts are canceled, Brazil may have enough corn supplies to make it to the next harvest.

Municipality of Campo Mourao in Western Parana - The early safrinha corn harvest has started in the municipality of Campo Mourao in western Parana and early results are confirming farmers worst fears. In areas that usually yield 100 to 110 sacks per hectare (95 to 105 bu/ac), the yields are in the range of 50 sacks per hectare (47.7 bu/ac).

Approximately 5% of the safrinha corn has been harvested and the earlier harvested corn is expected to be the best yielding, so yield estimates may decline as the harvest progresses. The safrinha corn was planted at least a month later than normal and then a severe drought impacted the crop during most of its development. The later developing corn was severely impacted by a series of frosts at the end of June that killed the plants during grain filling.

Most farmers in the region should still be able to cover their production costs due to record high domestic corn prices, but for the hardest hit farmers, they may have difficulties meeting their forward contracts.

Goias Safrinha Corn - According to the Institute for Strengthening Agriculture and Livestock in Goias (Ifag), as of July 23, approximately 20% of the safrinha corn in Goias had been harvested and yield losses are evident. Corn yields are variable with the earliest planted corn yielding the highest.

In the municipality of Jatai in southwestern Goias, the earliest harvested corn is registering yield losses of 40% or more with the later planted corn expected to be even worse according to the President of the Rural Union of Jatai. Prolonged periods of dry weather impacted the corn during its development and then isolated areas of frost in late June resulted in additional damage.

Corn prices in Goias closed last week at R$ 79.20 per sack (approximately$7.05 per bushel). Prices in the municipality of Rio Verde in southwestern Goias closed last week at R$ 84.00 per sack (approximately $7.50 per bushel).

Mato Grosso do Sul Safrinha Corn - In the municipality of Caarapo in southern Mato Grosso do Sul, the safrinha corn has been severely impacted by 6 different episodes of frost. The president of the Rural Union of Caarapo estimates that the corn in his municipality will experience losses of 55 to 60%. The harvest progress has been slow with only 15% of the corn harvested due to the high grain moisture. The harvest will not be completed until sometime in September. A lot of the corn was killed during grain filling, so it is unclear how the crop will dry down.