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December 14, 2015

Conab Increases Brazilian Soybean Estimate in December Report

Conab released their December Crop Report last Friday and they increased the 2015/16 soybean estimate by 0.46 million tons to 102.4 million. They increased the soybean acreage by 148,000 hectares to 33.18 million. The soybean yield was left unchanged from last month at 3,087 kg/ha or 44.7 bu/ac. Therefore, all the increased production was due to the increased acreage.

Year-on-year, the Brazilian soybean acreage is now up 3.4%, the yield is up 2.9%, and the total production is up 6.5% to 102.4 million tons or 6.2 million tons more compared to the 96.2 million tons produced in 2014/15.

In their commentary, Conab lists areas where there might be problems due to excessive rainfall or a lack of rainfall. I thought it was interesting that they classified all of the state of Mato Grosso, except for a few areas in the northern part of the state, as having favorable moisture. That does not seem to be supported by numerous reports from around the state that cite a lack of moisture as an ongoing concern. They were correct in citing that northeastern Brazil is the main area of concern due to generally dryer than normal conditions all across northeastern Brazil.

For corn, Conab increased the 2015/16 Brazilian corn crop slightly from last month. The Brazilian corn crop is now estimated at 82.04 million tons, which is up 0.13 million tons from last month. The increase came from the full-season corn which is now estimated at 27.48 million tons or 33.5% of the total corn crop. The safrinha crop estimate was left basically unchanged from last year at 54.56 million tons or 66.5% of the total corn crop.

They have the full-season corn acreage down 6.7% compared to last year with the yield being down 2.1%. The full-season corn yield seems pessimistic given the abundant rainfall across southern Brazil and it could be revised upward in subsequent reports.

For safrinha corn crop, they cited two different scenarios. They commented that the safrinha corn acreage in Mato Grosso might be less than anticipated due to the delayed soybean planting and the potential for adverse weather in late February and early March when the last safrinha corn would be planted. In contrast, good rainfall earlier in the growing season in the state of Parana could allow for farmers in that state to plant their safrinha corn 15 days earlier than expected affording the possibility of potentially good corn yields. Conab will make their first official assessment of the safrinha a corn crop in their February crop report.

As expected, they reduced their estimate of the Brazilian wheat crop from 6.2 million tons in their November report to the current 5.6 million tons. They cited the same adverse weather conditions that we have been reporting about for the last several months. The current estimate of 5.6 million tons does not tell the complete story because a lot of wheat is of such poor quality that it will only be used for animal feed. I would not be surprised if they lowered the wheat estimate even further in subsequent reports. Last year Brazil produced 5.9 million tons of wheat.