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July 31, 2020

Brazilian Corn Acreage could Increase 2.3% in 2020/21

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

Brazilian farmers will start planting their 2020/21 corn in mid-August if the conditions are favorable, so it's time to take look at the potential 2020/21 Brazilian corn acreage. These are my initial estimates and they could easily change before the planting is complete.

2020/21 Brazil Corn Acreage up 2.3% - Brazilian corn producers also had a very good 2019/20 growing season with record high domestic corn prices. For example, Deral reported that farmers in Parana registered the best year ever when you compare the cost of producing corn vs. the price of corn.

The 2020/21 Brazilian corn acreage is estimated at 18.87 million hectares (46.6 million acres), which would represent an increase of 0.44 million hectares (1.08 million acres) or 2.3% compared to Conab's estimate of 18.43 million hectares for the 2019/20 Brazilian corn crop (45.5 million acres). The full-season corn acreage could decline 2% to 4.13 million hectares (10.2 million acres) and the safrinha corn acreage could increase 4% to 14.23 million hectares (35.14 million acres).

The state of Rio Grande do Sul is Brazil's largest full-season corn producing state and farmers in the state had a very bad corn crop in 2019/20 due to a severe drought. Conversely, safrinha corn producers in Brazil generally had a good year in 2019/20 due to record high corn prices.

The 2020/21 Brazilian corn production is estimated at 105.0 million tons which would represent an increase of 4.4 million tons or 4.4% compared to Conab's estimate of 100.5 million tons for the 2019/20 Brazilian corn crop.

Factors that could influence the corn expansion in Brazil include:

  • Record high domestic corn prices, which are also the result of a devalued Brazilian currency.
  • Strong domestic demand for corn due to strong exports of poultry, pork, and beef.
  • Tight carryover stocks supporting domestic corn prices.
  • Since three quarters of Brazil's corn is safrinha corn production, if the soybean acreage increases as expected, that would automatically offer Brazilian farmers the opportunity to plant more safrinha corn.
  • Corn competes with cotton for safrinha acreage in Mato Grosso, and since the Brazilian cotton acreage is expected to decline as much as 20%, farmers in Mato Grosso may switch some of their intended safrinha cotton acreage to safrinha corn instead.

Factors that could limit corn expansion in Brazil include:

  • Day weather in August and September due to La Nina could delay some of the full-season corn planting which could result in the switching of some of the intended corn to soybeans instead.
  • Dry weather in September and October could delay the soybean planting and thus delay the soybean harvest next February and March. That in turn, could push the planting of the safrinha corn past the ideal planting window convincing some farmers not to plant all their intended safrinha corn acreage.
  • Continued weakness in ethanol prices which in turn, could weigh on corn prices in Mato Grosso where more and more of the state's corn production is being used to make ethanol.
  • A strengthening of the Brazilian currency compared to the U.S. dollar which could lead to weaker domestic corn prices.
  • A huge 2020 U.S. corn crop that could result in lower international corn prices.

Corn Planting Sequence in Brazil

  • In southern Brazil, farmers start to plant their full-season corn during the second half of August depending on the weather. The full-season corn planting is quite extended and the plating will not be completed until sometime in November or December.
  • The full-season corn accounts for about one quarter of Brazil's total corn production.
  • The safrinha corn planting starts in early January and ends generally in early March, even though the ideal planting window usually closes about the third week of February.
  • The safrinha corn accounts for approximately three quarters of Brazil's total corn production.