Oct 12, 2018

Conab: Smaller Soy, but Larger Corn Crop in Brazil in 2018/19

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

In their first estimate of the 2018/19 Brazilian crop production released yesterday, October 11th, Conab forecasted a soybean production in the range of 117.0 to 119.4 million tons with a mid-range of 118.2 million tons. The mid-range production of 118.2 million tons would be 1.0 million tons less than last year or a reduction of 0.8%.

They forecasted the 2018/19 soybean acreage in the range of 35.44 to 36.17 million hectares with a mid-range of 35.81 million hectares (88.45 million acres). The mid-range acreage of 35.81 million hectares would be an increase of 1.9% compared to last year. The soybean yield is estimated at 3,302 kg/ha (48.8 buy/ac), which is down 2.7% from last year's yield of 3,394 kg/ha (50.2 bu/ac).

The increase in soybean acreage is due to the strong domestic prices resulting from the trade dispute between the United States and China. In the main producing states, the soybean acreage is forecasted to increase 1.5% in Mato Grosso to 9.65 million hectares (23.83 million acres), 0.75% in Parana to 5.50 million hectares (13.58 million acres), 1.5% in Rio Grande do Sul to 5.77 million hectares (14.25 million acres), 3.0% in Goias to 3.48 million hectares (8.59 million acres), and 4.2 % in Mato Grosso do Sul to 2.78 million hectares (6.86 million acres).

Much of the new land that has been brought into production over the past decade has been in northeastern Brazil and the soybean expansion will continue in that region in 2018/19. The increase in soybean acreage will be the least in southern Brazil, which is not surprising since much of that area is either planted full or soybeans must compete with full-season corn for acreage.

For the Brazilian corn crop, Conab estimated the total 2018/19 production in the range of 89.7 to 91.0 million tons with a mid-range of 90.4 million tons. The mid-range production of 90.4 million tons would be 9.7 million tons more than last year or an increase of 12%.

They estimated that the full-season corn acreage would increase approximately 2.1% to 5.16 million hectares (12.74 million acres) and the yield will decline 2.1%. The full-season corn production was estimated in the range of 25.9 to 27.3 million tons with a mid-point of 26.6 million tons. The mid-range production of 26.6 million tons would essentially be unchanged from last year.

They left the safrinha corn acreage unchanged from last year at 11.54 million hectares (28.5 million acres). They estimated the safrinha corn yield at 5,518 kg/ha (84.9 bu/ac), which is 17% more than last year's yield of 4,721 kg/ha (72.7 bu/ac). The safrinha production is estimated at 63.7 million tons which is 9.8 million tons more than last year or an increase of 18%.

Conab traditionally does not adjust the safrinha corn acreage until their February Crop Report because farmers will not start planting their safrinha corn until sometime in January. As a result, I think they are underestimating the potential acreage for the 2018/19 safrinha corn crop.

Last year, the soybean crop was harvested very late in some areas due to delayed soybean planting. As a result, some farmers did not plant all their intended safrinha corn acreage. Thus far this year, the situation is just the opposite. The 2018/19 soybean planting is progressing very quickly with some states such as Parana reporting a record fast planting pace. The subsequent early soybean harvest should allow ample opportunity to plant safrinha corn. Additionally, domestic corn prices are about 40% higher this year compared to last year and that too could encourage additional safrinha corn acreage.