June 18, 2015

Brazilian Farmers have high Expectations for Safrinha Corn Crop

Brazilian farmers are starting to harvest their safrinha corn crop and they have very high expectations for the crop. Mato Grosso is the leading safrinha corn producing state in Brazil and the Mato Grosso Institute of Agricultural Economics (Imea) reported this week that the corn harvest has started a little slower than in past years due to the delayed planting, but the current dryer weather should increase the dry down rate for the corn.

In their June report, Conab is estimating that the 2014/15 Brazilian corn crop will set a new record of 80.2 million tons while other analysts are expecting an even greater production. Conab is estimating that the safrinha corn crop in Mato Grosso will be 17.8 million tons, but Imea is estimating the crop much higher at 20.3 million tons. Parana is the second leading safrinha corn producing state and the Department of Rural Economics (DERAL) is anticipating a production of 10.39 million tons, which would be slightly more than in 2013/14.

Regardless of the final corn production, the expectation for record yields is pressuring domestic corn prices in Brazil, but high yields can compensate for low prices and that is exactly what Brazilian farmers are hoping for. Mato Grosso is usually the state where the Brazilian government intervenes the most to support corn prices, but the farmers in the state have already forward contracted approximately 60% of their anticipated corn production, which may reduce the need to subsidize the corn price on the remaining 40% of the crop.

The director of the Agriculture and Livestock Federation of Mato Grosso (Famato) indicated that much of this year's corn was sold for R$ 15 to R$ 16 reals per sack which is profitable for farmers. Prices have since declined to approximately R$ 13 per sack, but if the yields stay above 100 sacks per hectare (6,000 kg/ha or 92.4 bu/ac), farmers could still make a small profit even at the lower price.

Representatives from Famato in Mato Grosso and the Agricultural Federation of the State of Parana (Faep) have not yet solicited help from the Brazilian government to support corn prices in their respective states. They are holding off on their request for help until they have more yield information and can better judge the level of assistance that may be needed.