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August 23, 2016

Early Planting of the 2016/17 Full-Season Corn Underway in Brazil

Farmers in southern Brazil have already initiated the planting of their 2016/17 full-season corn crop. The first corn was planted as much as two weeks ago in Rio Grande do Sul and Parana. This was an unusually early start for corn planting and some of the early-planted corn in Rio Grande do Sul will be followed by a second crop of soybeans.

The conditions earlier were favorable for corn germination and stand establishment, but much of southern Brazil is still under a frost threat that started over the weekend with the advance of a strong cold front. Any frost will do little harm to the corn because the corn is still very small, but a frost could impact the wheat crop in the region because most of the wheat is flowering or beyond, which makes the crop susceptible to freezing temperatures.

The full-season corn acreage in southern Brazil is expected to increase maybe 10% or 300,000 hectares. Safrinha corn acreage early next year is also expected to increase, but that will be highly dependent on the weather and financial situation late in 2016 and early in 2017.

The Secretary for Farm Policy, Neri Geller, is optimistic that the 2016/17 Brazilian corn production will rebound to 84 million tons, which would be 16-18 million tons more than the disastrous 2015/16 corn crop.

Geller has also indicated that he wants to rebuild public stocks of corn, which is currently near zero, to 2.3 million tons. I think this is a very ambitious goal and the government would probably have to wait to purchase the corn until the next safrinha corn harvest is underway next June and July. Currently, corn supplies are very tight and domestic corn prices are double those of last year. Brazil will need to import corn later this year to meet the needs of the livestock industry in southern Brazil. It would not make much sense to purchase imported corn to build public stocks because it would make a tight situation even tighter.

If he is successful in building public stocks of corn to 2.3 million tons, it would mean that less corn would be available for the export market.