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December 12, 2016

Conab's December Report Lowers Soy and Corn Estimates Slightly

In their December Crop Report, Conab made a slight downward adjustment for both their 2016/17 Brazilian soybean and corn estimates compared to November.

Brazilian soybeans - Their soybean estimate is now 102.4 million tons (down 0.11million tons from November), which is 7 million tons more than last year or +7.3%. The 2016/17 Brazilian soybean acreage is up 2.0% from last year to 33.9 million hectares (83.7 million acres). The Brazilian soybean yield is now estimated at 3,022 kg/ha (43.8 bu/ac) which is 5.3% greater than last year's yield of 41.6 bu/ac.

The soybean acreage in southern Brazil declined slightly from the last growing season due to farmers planting more full-season corn. The biggest increase in soybean acreage is in northern and northeastern Brazil.

The soybean yield in Mato Grosso is slightly below the November estimate and in Parana, the soybean yield is unchanged from November. There was a big drop off for the soybean yields in Rio Grande do Sul. In December, the soybean yield in Rio Grande do Sul is estimated at 2,700 kg/ha (39.1 bu/ac) compared to 2,852 kg/ha in November (41.3 bu/ac), or a reduction of 2.2 bu/ac.

While the soybean crop in Rio Grande do Sul is currently rated in good condition, they commented in their report that "The preoccupation now is the forecast for low precipitation for the second half of December and the first half of January." So apparently, their meteorologists are forecasting that moisture deficits will be developing in Rio Grande do Sul over the next 30 days. That appears to be the reason for the 2.2 bu/ac reduction from last month.

Conab's 2016/17 soybean estimate is about in the "middle of the pack" of all the estimates. Some estimates are 1-2 million tons below their estimate and some are 1-2 million tons above their estimate.

Brazilian full-season corn - The report indicated that the full-season corn acreage is up 3% compared to last year to 5.54 million hectares (13.6 million acres) and the yield will be 4,999 kg/ha (76.9 bu/ac) or 4.2% greater than last year. The full-season corn crop is estimated at 27.74 million tons or 1.88 million tons more than last year (+7.3%).

Brazilian safrinha corn - As expected, the December report said very little about the safrinha corn crop (only two paragraphs out of a 150 page report). They continue to carry forward the safrinha corn acreage from last year at 10.53 million hectares (26.0 million acres) with a corn yield of 5,323 kg/ha (81.9 bu/ac), which is 37.7% greater than last growing season. The total safrinha corn crop is estimated at 56.07 million tons or 15.3 million tons more than last year (+37.7%).

Brazil's total 2016/17 corn crop is estimated at 83.8 million tons or 17.2 million more than last growing season.

Conab's 2016/17 corn estimate is definitely on the very low end of the various corn estimates. Conab is estimating the corn crop at 83.8 million tons, I am estimating the crop at 86 million tons and some estimates are as high as 93 million tons. They are low because they have not yet estimated the 2016/17 safrinha corn acreage. They will report their first estimate for the 2016/17 safrinha corn estimate in their February Crop Report.

In order to achieve the higher corn estimates such as 93 million tons, two things need to occur. First, the safrinha corn acreage needs to increase at least 15% or more and second, the safrinha corn yields need to be essentially equal to the record safrinha corn yield. It is possible that those two things might occur, but I think that is very optimistic at this point.