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March 14, 2017

WASDE Increases Brazilian Soybean and Corn Estimates

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

In their March Report, WASDE significantly increased their estimates for both the Brazilian soybean and corn crops. For the 2016/17 Brazilian soybean crop, they increased their estimate by 4 million tons to 108.0 million tons (Conab is 107.6 million tons). They are estimating the Brazilian soybean acreage at 33.9 million hectares (Conab is 33.8 million hectares). The Brazilian soybean yield is now estimated at 46.2 bu/ac (Conab is 46.0 bu/ac).

It is not surprising that they are a little higher than Conab on these estimates. What is surprising is how aggressively they increased their estimates in the March Report. They also increased Brazil's soybean exports by 0.5 million tons to 61.0 million (Conab is 59.0 million).

Their increase for the Brazilian corn crop was even more dramatic. They increased the 2016/17 Brazilian corn estimate by 5.0 million tons to 91.5 million (Conab is 88.9 million tons). They have the Brazilian corn acreage at 17.0 million hectares (Conab is 16.7 million hectares) and the Brazilian corn yield is estimated at 82.8 bu/ac (Conab is 81.6 bu/ac).

I view these estimates of the Brazilian corn crop as very optimistic. I hate to keep repeating myself concerning the Brazilian safrinha corn crop, which will represent two-thirds of Brazil's total corn production, but I think it is important to remember the level of risk associated with the safrinha corn production in central Brazil.

The critical time for corn production is just prior to pollination, during pollination, and during grain filling. Pollination generally occurs about 60 days after emergence. The safrinha corn in Mato Grosso will pollinate probably sometime during April. In Parana, the pollination will be a little later probably occurring from mid-April to mid-May. Therefore, the Brazilian safrinha corn crop still has 2-3 months to go or more before we can be assured of the corn yields.

The problem is that the weather in Brazil is now becoming dryer, especially in the more eastern areas. In the city of Brasilia, they have instituted water rationing because they have received less than 30% their normal rainfall over the past 45 days. There are improved chances of rainfall for central Brazil in the 6-10 day forecast.

I don't know when the summer rains will end in central Brazil, but there are forecasts for dryer than normal and hotter than normal conditions during March, April, and May. If these forecasts verify, there could be problems ahead for the safrinha corn. There have been many comments that the safrinha corn is starting off with good soil moisture and that the soil moisture will sustain the crop going forward. I don't think that argument holds water because the cerrado soils of central Brazil don't hold water. When the summer rains end, which is generally late April or early May, the temperatures remain elevated in the 80's or 90's. A mature corn crop could experience significant moisture stress as quickly as 7-10 days without precipitation. In order to achieve the corn yields indicated in the WASDE and Conab estimates, the corn fields of central Brazil will need to receive rainfall through the month of May. It remains to be seen if that will happen or not.

The latest estimates have the safrinha corn crop in Mato Grosso 98% planted and in Parana it is 80% planted.