Oct 17, 2017

2017/18 Brazilian Corn Crop Could Face Problems

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

Nationwide, the full-season corn on Brazil is approximately 37% planted compared to 42% last year and 34% average. Planting is about normal in southern Brazil, but slower than normal in central Brazil.

The 2017/18 Brazilian corn crop could face two problems going forward. First, I think the full-season corn crop is going to be disappointing due to reduced acreage and weather concerns in the two biggest producing states of Rio Grande do Sul and Minas Gerais.

In the state of Rio Grande do Sul, the full-season corn is approximately 80% planted which is about normal. The early planted corn is generally in good condition, but the concern is for the corn that has not been planted. The state has recently been inundated by heavy storms with high winds and huge hail (some as large as softballs) that have left several dozen municipalities in a state of emergency. If farmers in the state cannot get their corn planted soon, they may switch some of that corn to soybeans instead.

The state of Minas Gerais has been too dry especially in the areas of the state where a lot of the full-season is planted. If it stays dry, the ideal planting window may pass and farmers might opt for less corn and more soybeans instead.

In the state of Parana, the corn is 70% planted, and it is rated 2% poor, 22% average, and 76% good. The full-season corn acreage in the state is expected to be down 31% from last year to 349,000 hectares. The safrinha corn acreage in the state is expected to be 2.4 million hectares or approximately 7 times larger than the full-season corn acreage. As an illustration just how small the full-season corn acreage will be in Parana, the soybean acreage in the state (5.4 million hectares) will be approximately 16 times larger than the full-season corn acreage.

Therefore, the full-season corn crop in Brazil may end up being disappointing, which means that the safrinha corn crop may eventually represent more than 75% of Brazil's total corn production in 2017/18. The safrinha corn may have problems of its own due to reduced acreage resulting from low corn prices and delayed planting due to delayed soybean harvesting.

Brazilian farmers are not enthusiastic at all about the safrinha corn production. Low corn prices may persuade some farmers to forgo some of their safrinha corn acreage and plant small grains instead or even cover crops. Additionally, safrinha corn and safrinha cotton compete for the same acreage in the state of Mato Grosso and farmers in the state are indicating that the cotton acreage may increase 10% or more, which could chip away at some of the safrinha corn acreage.

Conab estimated that the Brazilian cotton acreage would increase between 5.5 to 15.4% in 2017/18. The two main cotton crops in Brazil are the safrinha cotton in Mato Grosso and the full-season cotton in Bahia. Both of these crops compete with corn for acreage. The safrinha cotton crop in Mato Grosso competes with safrinha corn and the full-season cotton crop in Bahia competes with full-season corn. The total cotton acreage in Brazil is estimated at between 991,200 and 1,100,000 hectares, which is small compared to corn. If the Brazilian cotton acreage increases 100,000 hectares, it would probably come at the expense of mainly corn.