December 28, 2017

Brazilian Farmers lack Enthusiasm for 2017/18 Safrinha Corn

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Approximately 70% of Brazil's 2017/18 corn production will come from the safrinha crop that farmers will start planting in January. The two biggest safrinha corn producing states in Brazil are Mato Grosso that produced 42% of last year's safrinha crop and Parana that produced 19% of last year's crop.

Brazilian farmers are certainly not very enthusiastic about their 2017/18 safrinha corn crop due to low domestic corn prices and potential delayed planting due to a delay in getting the early soybeans planted in September and October. As a result, the 2017/18 safrinha corn crop is expected to be smaller than last year's crop.

The Mato Grosso Institute of Agricultural Economics (Imea) is estimating that farmers in the state will reduce their safrinha corn acreage a little more than 9% and that the yields will decline approximately 9% as well due to delayed planting. Imea estimates that 30% of the corn will be planted after the ideal planting window closes about the third week of February. As a result, they are estimating that Mato Grosso will produce 24.7 million tons of safrinha corn in 2017/18 compared to 28.6 million tons in 2016/17 (-18.7% or -3.9 million tons).

Low corn prices are the big obstacle for farmers in Mato Grosso. Imea contends that the breakeven point for high technology corn production in the state is R$ 19.23 per sack (approximately $2.65 per bushel). The current price of corn in Sorriso, Mato Grosso, which is the largest safrinha corn producing municipality in Brazil, is in the range of R$ 15.00 per sack (approximately $2.10 per sack).

In their first estimate of the safrinha corn crop in the state of Parana, the Department of Rural Economics (Deral) is estimating that farmers in the state will reduce their safrinha corn acreage by 11% to 2.15 million hectares and the total production will be 12.3 million tons (-0.8 million tons compared to the 2016/17 crop).

Last year, the safrinha corn crop in Brazil produced 67.3 million tons. When all the states are combined, the 2017/18 safrinha corn crop in Brazil is expected to be 5-6 million tons less than in 2016/17. Conab is estimating that the 2017/18 full-season corn crop in Brazil will be approximately 5 million tons less than last year (30.4 million tons in 2016/17 vs 25.0 million tons expected in 2017/18). Therefore, the total 2017/18 Brazilian corn production could be 10-11 million tons less than the 97.7 million tons produced in 2016/17.