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December 14, 2011

Conab's Estimate of Brazilian Corn Crop is Slightly Pessimistic

Conab is estimating that the full-season corn acreage will increase 10.8% to 8.77 million hectares and that the full-season corn yields will decline 2% compared to last year, also due to anticipated dryer than normal conditions in southern Brazil. This also seems a little pessimistic given the fact that they said the planting was good and the early development of the crop has been very good. The key area to watch for the full-season corn crop would be the state of Rio Grande do Sul where 14% of Brazil's full-season corn is planted. The state increased its full-season corn acreage by 14.7% this year and Conab is estimating that the state's corn yield will decline by 7.5%. Corn pollination in the state will generally start in late December and continue through the month of January, so the weather during the next 6 weeks will be critical in determining the success of the crop.

The eventual key for the Brazilian corn crop will be what happens with the safrinha<.i> production. Conab commented that they expect the safrinha<.i> acreage to increase due to strong corn prices and an early planting of the soybean crop, but they thought it was too early to estimate the safrinha<.i> acreage. They indicated that they intend to conduct a planting intensions survey for the safrinha<.i> corn crop that they will include in their January report.

As I have mentioned repeatedly in previous reports, everything seems to be in place for a big increase in safrinha<.i> corn acreage. The soybeans were planted early which means there will be ample time for the farmers to plant their safrinha<.i> corn. Seeds companies reported weeks ago that they had already sold out of many of the most popular corn hybrids indicating a strong desire to plant more corn.

Over the next few months, there will be two areas of concern for the safrinha<.i> corn crop. The first concern will be the weather during the soybean harvest in January. If the rainfall is not excessive, the farmers should be able to harvest their soybeans and to plant their safrinha<.i> corn in a timely manner. The second area of concern will be how long the rains continue. If there is ample rainfall through April and May, then the grain filling should be successful. If the rains end early like they did last year, then there may be some problems successfully completing grain filling.

For the entire Brazilian corn crop, both full-season and safrinha<.i>, Conab is estimating a 60.3 million ton production, which is lower than most other estimates, but their lower estimate is understandable given the fact they have not formulated an estimate for the safrinha<.i> acreage or production. Once they do that, I suspect their corn estimate will fall in line with most other estimates in Brazil.