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November 29, 2017

2017/18 Corn Acreage in Brazil could Disappoint

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

As we have been reporting for a number of weeks, farmers in Brazil significantly reduced their full-season corn acreage (which is approximately one-quarter of Brazil's total corn production) and they are expected to also reduce their safrinha corn acreage as well (which is approximately three-quarters of Brazil's total corn production).

Brazil Full-Season Corn - Brazilian farmers are still planting their full-season corn in the state of Minas Gerais. Planting in the state has been delayed due to earlier dry conditions and it is now very late to be planting corn. In fact, it has been reported that some farmers in the state have delayed their corn planting so that they can plant their soybeans in a timely manner. Soybeans generate more income than corn, so they want to insure the best soybean crop possible.

Minas Gerais is forecasted to plant 786,000 hectares of full-season corn (down approximately 13% from last year), making it the number one full-season corn producing state in Brazil. Rio Grande do Sul is the second leading full-season corn producing state with 707,000 hectares (down approximately 12% from last year). The number three state now is Sao Pauli with 354,000hectares (down approximately 5% from last year). The state of Parana has fallen to fourth place with 338,000 hectares (down approximately 33% from last year).

Approximately 60% of Brazil's full-season corn acreage will be planted in south-central Brazil with the remainder planted in northeastern Brazil. Of the south-central full-season corn acreage, the state of Minas Gerais will plant 27%, Rio Grande do Sul will plant 25%, Sao Paulo will plant 12.4%, and Parana will plant 11.8%.

Brazil Safrinha Corn - Approximately three-quarters of Brazil's total corn production in 2017/18 will be safrinha production, so let's take a look at what might happen in the major safrinha corn producing states. Conab has not yet estimated the 2017/18 safrinha corn acreage, they have just carried forward last year's acreage. Conab will issue their first safrinha corn acreage estimate in their February Crop Report. Therefore, we have to rely on individual states to give us an indication of the 2017/18 safrinha corn acreage,

Mato Grosso - The Mato Grosso Institute of Agricultural Economics (Imea) is forecasting that the safrinha corn acreage will decline 10% and the yields will decline 9%. Imea is expecting the yield to decline from 107 sacks per hectare last year (98.8 bu/ac) to 97 sacks per hectare in 2017/18 (89.6 bu/ac). The reduced production is due to low prices and delayed soybean planting. Imea expects 30% of the safrinha corn to be planted after the ideal planting window closes about the third week of February. In Mato Grosso alone, the safrinha corn production may decline 4 million tons in 2017/18.

Parana - There are areas in the state of Parana where the soybean planting was delayed and as a result, the safrinha corn will be planted late as well. For example, in the region of Pato Branco in southwestern Parana, the president of the Rural Syndicate indicated that for each day the corn is planted after the ideal window closes, yields can decline 3-5 sacks per hectare.

Goias - Of all the major soybean producing states, the early soybean planting was delayed the most in the state of Goias. As a result, it is estimated that as much as 40% of the safrinha corn acreage in the state will be planted after the ideal window closes.

Maranhao - The president of Aprosoja for the state of Maranhao is estimating that 30% of the intended safrinha corn acreage will not be planted due to high costs and low prices.

Bottom Line - The eventual safrinha corn acreage in Brazil will depend on domestic corn prices and the weather during February and March. Domestic corn prices in Brazil are expected to be somewhat higher in 2018, but the weather next year is still uncertain. If it looks like the rainy season will be extended, like it has been for 4 out of the last 5 years, then farmers may be encouraged to plant all their safrinha corn acreage. If it looks like the rainy season will end early, than they may be reluctant to plant all of their intended safrinha corn acreage.