Jul 01, 2020

Increased Acreage and Late Rains Help Brazil Safrinha Corn

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

The Brazilian corn estimate was increased 2.0 million tons this week to 98.0 million and I have a neutral to slightly higher bias going forward. The reason why I increased to corn estimate is due to the increased acreage of safrinha corn. The biggest corn producing state is Mato Grosso and it appears that the safrinha corn acreage in the state increased over 11%, so even if the yields are variable, there is still going to be an increase in production compared to last year. It appears the farmers in the state switched some of their intended cotton acreage to safrinha corn instead. Additionally, rains during late May and June in southern Brazil helped the yield prospects of the latest planted safrinha corn.

The safrinha corn was 15.1% harvested as of late last week compared to 26.7% last year and 13.2% average according to ARC Mercosul. This represents an advance of 7.2% for the week.

Mato Grosso - The safrinha corn in Mato Grosso is 31.5% harvested compared to 42% last year and 25.4% average according to the Mato Grosso Institute of Agricultural Economics (Imea). The most advanced harvest is in the mid-north where the corn is 43.8% harvested. The slowest harvest is in the southeast where 14% of the corn has been harvested.

Conab estimates that the safrinha corn acreage in Mato Grosso increased 11.2% this year from 4.8 million hectares to 5.4 million hectares. Conab is expecting variable corn yields in Mato Grosso with a statewide yield of 6,268 kg/ha (96.5 bu/ac), which is down 1.7% compared to last year. Conab estimates that the production will increase 9.3% to 33.9 million tons.

The weather across most of the state has been favorable for the development of the safrinha corn with the exception of the southern and southeastern parts of the state that experienced dryer than normal conditions early in the growing season that resulted in reduced germination and lower yield potentials. Rainfall at the end of April and early May helped compensate for some of the earlier losses.

Parana - The safrinha corn in Parana was 4% harvested earlier last week compared to 34% last year according to the Department of Rural Economics (Deral). This represents an advance of only 1% for the week. The corn is 4% pollinating, 57% filling grain, 39% mature, and 4% harvested. The corn is rated 17% poor, 39% average, and 44% good.

There are a lot of reports of disappointing corn yields in Parana especially for the early planted corn that ran into dry weather during early May. The later planted corn benefited from improved rains that started in late May.

Goias - In the central Brazilian state of Goias, the early safrinha corn harvest has started in the municipality of Cristalina, which is located in eastern Goias. Farmers had been waiting for the grain moisture to decline to acceptable levels, so the harvest pace will now pick up going forward.

According to the president of the Rural Syndicate of Cristalina, the summer rainy season lasted longer than normal this year and extended into the month of May, which should result in good corn yields.

The municipality of Cristalina has some of the most center pivot irrigation systems of any municipality in Brazil and approximately 30% to 40% of the safrinha corn is irrigated. Farmers are expecting irrigated corn yields in the range of 130 to 140 sacks per hectare (120 to 130 bu/ac) and dryland corn yields in the range of 100 sacks per hectare (92.4 bu/ac).

Farmers in the region have already sold approximately 60% of their anticipated 2019/20 corn production for prices above R$ 30.00 per sack (approximately $2.75 per bushel). This will guarantee good margins on their corn production and farmers are already investing their profits in their next soybean crop, which they will start planting in September.

It is estimated that farmers have already purchased approximately 70% of the inputs needed to produce their 2020/21 soybean crop. Brazilian farmers have purchased the inputs for their next crop earlier than normal this year in order to take advantage of the strong domestic soybean and corn prices due primarily to the devaluation of the Brazilian currency. They are also asking for early delivery of their inputs in the hope of avoiding any potential logistical problems that may be caused by the Covid-19 pandemic.

In the municipality of Mineiros, which is located in southwestern Goias, farmers have harvested 15% of the safrinha corn and they are anticipating that the final yields will be in the range of 120 to 130 sacks per hectare (110 to 120 bu/ac). Farmers have already sold 70% of their anticipated production and they have purchased 95% of the inputs needed for their 2020/21 soybean crop. They have also forward contracted their 2020/21 soybeans for R$ 90 to R$ 95 per sack ($8.20 to $8.65 per bushel), which is a very profitable price.