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February 4, 2016

Safrinha Corn Prospects Improving in Brazil

Farmers always pay close attention to prices and the current record high domestic prices for corn in Brazil is certainly catching the attention of Brazilian farmers. Domestic corn prices in Brazil continue to sure to levels no one thought possible just a few weeks ago. A 50% increase in domestic corn prices in Brazil since January 1st is not uncommon.

As a result, estimates for safrinha corn acreage in Brazil are moving higher as well. In some states such as Parana and Sao Paulo, some analysts feel the safrinha corn acreage could increase 5% and 10%, respectively. They also feel that the high corn price will encourage farmers to try to maximize their corn yields with improved hybrids and increased use of fertilizers.

Therefore, some analysts are estimating that the safrinha corn acreage could end up in the range of 10.0 to 10.5 million hectares or 9-10% higher than last year and the total safrinha corn production could be as high as 57.7 million tons or 6% more than last year.

In contrast, the safrinha corn acreage in Mato Grosso and northeastern Brazil will be somewhat constrained due to the delayed planting and harvesting of the soybean crop. In Nova Mutum, which is located in central Mato Grosso, approximately 40% of the safrinha corn will be planted after the ideal planting window has closed. The Mato Grosso Institute of Agricultural Economics (Imea) estimated that the safrinha corn acreage in the state would increase 2%, but that the average yield would decline 10% due to uncertain weather and lower fertilizer application. But, the Imea estimate was released while the drought was still impacting the state and before the current surge in corn prices. With these high corn prices, I think Imea will be more positive about the safrinha corn crop in their next assessment.

Conab is expected to release their first estimate of the 2015/16 safrinha corn crop in their February crop report. Thus far, they have just carried forward the acreage and production estimates from last year which were 9.55 million hectares of safrinha corn and a total production of 54.5 million tons.