Aug 26, 2021

Expectations for Brazil's 2020/21 Safrinha Corn Continue to Decline

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

Brazilian farmer's worst fears are being confirmed as the 2020/21 safrinha corn harvest nears completion. The yields and quality of the latest harvested corn continues to decline. The last corn to be harvested is the corn that was planted the latest and killed prematurely by a series of frosts in June and July. In addition to the low yields, the quality of the latest harvested corn is very poor, so poor in fact, that some grain elevators will not accept the grain. AgRural reported that 79% of the safrinha corn had been harvested as of late last week.

In their latest evaluation of the safrinha corn crop, the consulting firm StoneX lowered their 2020/21 Brazilian corn production to 59.6 million tons compared to 82 million tons in their previous estimate. They also stated that their estimate might be reduced even more once the corn harvest is completed in Parana, which is the second largest safrinha corn producing state in Brazil. In 2019/20, Brazil produced 102.5 million tons of corn.

Across south-central Brazil, farmers are routinely reporting corn yield reductions of 40% to 60% with some as high as 80% to 100%. The safrinha corn was planted a month or more later than recommended, it then encountered an historic drought and much of the crop was killed prematurely by a series of frosts in June and July when the crop was starting to fill the grain.

The safrinha production accounts for approximately three quartets of Brazil's corn production. With the very poor safrinha corn yields, livestock producers in southern Brazil have already started importing corn from Paraguay and Argentina to keep their operations functioning. Livestock producers are hesitant to purchase poor quality Brazilian corn due to its low nutritional value.

According to Brazil's Foreign Trade Secretariat (Secex), from January until now, Brazil has imported 1.16 million tons of corn and that that number is expected to increase to 3 million tons or more by the end of the year. Given the very tight corn supply, Brazil will probably continue importing corn until July of 2022 when the 2021/22 safrinha corn will start to be harvested.

Brazil's corn exports will also be curtailed as exporters prefer selling to the domestic market where prices are much higher. In 2020, Brazil exported 35 million tons of corn, but in 2021, that is expected to decline to below 20 million tons, maybe even as low as 16 million tons.

In their August Crop Report, Conab estimated the Brazilian corn production at 86.6 million tons with imports of 2.3 million tons and exports of 23.5 million tons. It is expected that Conab will lower their 2020/21 corn estimate in the September Crop Report. If that occurs, they will likely increase their estimate for corn imports and lower their estimate for corn exports.