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July 8, 2016

Conab Slashes Brazilian Corn Estimate by 7 Million Tons

In their July Crop Report, Conab lowered their 2015/16 Brazilian corn estimate by 7.08 million tons from 76.2 million tons in June to 69.1 million tons in July. Nearly the entire reduction was the result of a much lower safrinha corn crop.

Conab lowered the safrinha corn estimate by 6.94 million tons from 49.99 million tons in June to 43.95 million in July. The nationwide yield of the safrinha corn is now estimated at 4,174 kg/ha (64.2 bu/ac), which is down 10.7 bu/ac from the June estimate. In spite of an 8% increase in safrinha corn acreage in 2015/16, the safrinha production is now 21.1% lower than last year.

The reduction in safrinha corn production was the result of hot and dry weather in central Brazil and in northeastern Brazil starting in April and continuing through the growing season. Mato Grosso is the largest safrinha corn producing state in Brazil and Conab is estimating the corn yield in the state at 4,396 kg/ha (67.7 bu/ac), which is down 27% from last year. The total corn production in Mato Grosso is estimated at 15.65 million tons or 23% less than last year.

The state of Parana is the second largest safrinha corn producer, but dry weather in April and freezing temperatures in early June took a toll on the crop. Conab is now estimating the safrinha corn yield in Parana at 5,213 kg/ha (80.2 bu/ac), which is down 10.7% from last year. The total safrinha corn crop in Parana is estimated at 11.4 million tons or 2.2% more than last year. The safrinha corn acreage in the state increased 14.5% in 2015/16.

Conab reduced their estimate of Brazilian corn exports from 25.4 million tons in June to 22.0 million tons in July. In their commentary they stated that some exporters will not be able to obtain enough corn to fulfill their export contracts and that other exporters will wash-out their export contracts in favor of selling to the domestic market where prices are higher. Last year, Brazil exported 30.2 million tons of corn.

Domestic corn prices in Brazil reached record highs earlier in 2016, but they have since declined significantly due to harvest pressure and the flow of corn from central Brazil to southern Brazil where Brazil's livestock industry is concentrated. The safrinha corn crop is so small this year that domestic corn prices are expected to move higher again as soon as the harvest is complete.