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February 15, 2017

Safrinha Corn Planting Ahead in Mato Grosso, Behind in Parana

The 2016/17 Brazilian corn estimate was left unchanged this week at 86.0 million tons and I have a neutral to higher bias going forward. In their February report, Conab estimated that the full-season corn crop in Brazil would be 28.81 million tons and that the safrinha corn crop would be 58.59 million tons for a total Brazilian corn crop of 87.4 million tons.

The full-season corn harvest in Rio Grande do Sul is 35% with yields coming in better than expected in the range of 8,500 to 12,000 kg/ha (131 to 185 bu/ac). The seed quality is reported to be good. The corn crop in Rio Grande do Sul is 35% harvested, 25% ready for harvest, 30% filling grain, 5% pollinating, and 5% in vegetative development.

Conab stated in their report that if the safrinha corn gets planted within the ideal planting window, that their safrinha corn estimate could be increased. Nationwide, the safrinha corn in Brazil is approximately 25% planted. The safrinha corn planting in Mato Grosso is 46.6% which is up 20% for the week and ahead of last year when 25.7% was planted by this date. The fastest safrinha corn planting is in the central part of the state where 66% of the corn has been planted compared to 28% last year. The slowest planting is in the more southern locations in the state where approximately 27% of the safrinha corn has been planted compared to approximately 20% last year.

Mato Grosso is the leading safrinha corn producing state accounting for about 36.6% of the safrinha acreage. Second is the state of Parana which accounts for about 20.7% of the acreage. The safrinha corn planting in Parana has been slow due to the slow pace of soybean harvesting. Currently, approximately 10% of the safrinha corn has been planted in Parana.

Conab's assessment of the Brazilian corn production is quite close to what I have been estimating. Conab estimated the full-season corn crop at 28.81 million tons and I have been estimating it at 28.0 million tons. Conab estimated the safrinha corn crop at 58.59 million tons and I have been estimating it at 58.0 million tons. Since the crop has not even been planted yet and we don't know what the weather will be during the safrinha corn growing season, I decided to leave my Brazilian corn estimate unchanged at 86.0 million tons. If the corn gets planted in a timely manner and the weather during March-April-May cooperates, then I will increase my corn estimate. Until then, I thought it was prudent to wait and see how the planting and weather develops.

Farmers in Parana have been very slow sellers of their anticipated corn production. Less than 10% of the corn in Parana has been forward contracted compared to an average of 30-40% at this time of the year. Farmers have been slow to forward contract their corn in the hope of better prices going forward, but there is not much indication that domestic corn prices will improve. Conversely, Conab stated in their February crop report that they expect the domestic corn price to decline to the minimum price guaranteed by the government by the time the safrinha corn harvest is in full swing.

Currently, the September corn contract at the BN&F is R$ 30.00 per sack or $4.39. Last year at this time it was R$ 40.00 per sack or $5.86 per bushel. Out in Mato Grosso, local corn prices are much lower. The local price for July and August delivery is R$ 15.00 to R$ 16.00 per sack or approximately $ 2.20 to $ 2.35 per bushel.