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April 20, 2011

More Brazilian Farmers Bet on Safrinha Corn Production

The strong corn price convinced many farmers in Brazil to plant a second crop of corn even though the planting was delayed past the ideal time to plant the crop. safrinha corn production is always a risky proposition in Brazil due to the possibility of dry weather in Mato Grosso and/or the possibility of cold weather or even a frost in Parana.

Full season corn acreage in Brazil has declined for two years in a row as farmers opt to plant more of their corn as a second crop following soybeans. Approximately 40% of the corn acreage in Brazil during the 2010/11 growing season will be planted as safrinha corn.

Traditionally safrinha corn is planted in the states of Mato Grosso and Parana and together these two states usually plant the vast majority of the crop. Farmers in other states though have noted the good price for corn and they too are now starting to plant a second crop of corn. In the state of Piaui, which is located in northeastern Brazil, farmers haven traditionally only planted full season corn, but for the last several years, they have been experiment with safrinha corn production instead. A similar phenomenon is occurring all across central Brazil.

The final yield of the safrinha corn crop is largely determined by when the rainy season ends in Brazil. In southern Mato Grosso last year the last rain of the season fell on April 6th and if that were to be repeated this year, the safrinha corn yields in the state could be cut by as much as 50%. Corn in southern Mato Grosso is being forward contracted at prices nearly double that of last year.

For the last two growing season, farmers in central Brazil sold most of their safrinha corn production to the government because the local price for corn was below the minimum price set by the government. The government then paid the cost of transporting the corn to southern Brazil where it was needed for the livestock industry or to exporters. With the price of corn now above the minimum price set by the government, farmers may be more willing to sell their corn to grain merchandisers instead of the government.