Oct 10, 2013

Conab Estimates Brazil Soy Production Up, Corn Production Down

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

In their first assessment of the 2013/14 growing season in Brazil, Conab estimates that Brazilian farmers will increase their soybean acreage by 3.4% to 5.9% to 28.6 to 29.3 million hectares compared to the 27.2 million hectares planted in 2012/13. The total soybean production in Brazil is estimated in the range of 87.6 to 89.7 million tons or 7.5% to 10.1% more than last year. If realized, this would be another record large soybean crop in Brazil.

Brazilian farmers feel that soybeans offer a better profit opportunity compared to corn and as a result, they are switching some of the full-season corn acreage in southern Brazil to additional soybean production. In central Brazil the increase soybean acreage is the result of converting degraded pastureland to soybean production. In central Brazil farmers are planting as much early-maturing soybeans as possible in order to allow enough time to plant a second crop after the soybeans are harvested. In northeastern Brazil the increased soybean acreage is the result of clearing new land for row crop cultivation.

Total corn production in Brazil in 2013/14 is expected to decline 1.7% to 3.2% to 78.4 to 79.6 million tons compared to the 81.0 million tons produced in 2012/13. Brazilian farmers produce two corn crops per year. The full-season corn is planted in the spring as soon as the weather permits and the second crop or safrinha is planted in January or February after the soybeans are harvested. The full-season corn acreage is expected to decline 4.1% to 6.9% to 6.3 to 6.5 million hectares due to farmers switching some of their corn acreage to additional soybean production. In Parana the full-season corn acreage is expected to decline 15% to 19% and in Rio Grande do Sul it is expected to decline 10% to 12%. The full-season corn crop is estimated at 32.2 to 33.4 million tons or a decline of 4.1% to 7.4% compared to last year.

Conab did not give a new estimate for the 2013/14 safrinha corn acreage, but simply carried forward the acreage from 2012/13. They will not issue revised acreage figures until probably the December Crop Report. Therefore, the safrinha corn acreage estimate remains at 8.9 million hectares and the safrinha production estimate remains at 46.1 million tons or approximately 58% of Brazil's total corn crop.

Speculation is that the safrinha corn acreage will decline due to low or negative margins and that farmers will try to save production costs by reducing fertilizer applications. If they reduce safrinha corn acreage, they may increase the acreage for a second crop of soybeans, cotton, dry beans, grain sorghum, sunflowers, or other crops. Therefore, the final Brazilian corn production could end up being lower than what is currently estimated.