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June 2, 2011

Dry Weather Puts 3-4 mt of Safrinha Corn at Risk in Brazil

A lack of rainfall across Brazil has renewed concerns that the safrinha corn yields in Brazil will end up being disappointing. Mato Grosso is the number one safrinha producing state in Brazil (32% of the safrinha acreage) and Parana is the second leading producer (29% of the safrinha acreage). In light of the dry conditions in Brazil, there is an estimated 3-4 million tons of corn that could be lost due to the dry weather. Farmers in Brazil had been hoping for an extended rainy season so that there would be adequate soil moisture for their late planted corn, but unfortunately the rainy season ended a month earlier than normal and now their corn crop is suffering irreversible losses.

Rainfall in Mato Grosso has been in very short supply since early April when the rainy season ended a month earlier than anticipated. For the safrinha corn planted at the normal time, the onset of dry weather probably won't impact the crop all that much, but for the safrinha corn planted after the normal planting window had closed (end of February), the dry weather is going to result in lower yields.

The Mato Grosso Institute of Rural Economics (Imea) has not yet released a revised estimate of the safrinha corn production for the state, but many producers in the state estimate losses in the range of 40% to 50%. In some of the hardest hit regions of the state, the rains ended a few weeks after the corn was planted. Since then, temperatures in the state have been in the upper 80s and lower 90s and in some cases, the corn will probably be abandoned.

The weather has also turned dryer in the state of Parana as well. In the driest regions of northern and northwestern Parana, it has been a month without significant rainfall and there is very little rain in the near term or long term forecast. Even in the wetter areas, the rainfall during May was less than half the long term average. In the state of Parana, it is also the latest planted corn that is suffering the most.

The Department of Rural Economics (Deral) in Parana has already started to slightly lower its yield projections for the safrinha corn crop. Originally they had estimated that the statewide safrinha corn yield would be 4,420 kg/ha (68 bu/ac), but that has now been lowered to 4,350 kg/ha (67 bu/ac).

Deral also released new acreage estimates for the state indicating that farmers planted 1.7 million hectares of safrinha corn. The acreage estimate is 480,000 more than what they had estimated just one month ago or a 39% increase in just one month! I think the Deral estimates are just now catching up to the current conditions because Conab had already estimated that 1.65 million hectares of safrinha corn would be planted in Parana.

As far as the statewide yield estimates are concerned in Parana, Deral is estimating the corn yield at 4,350 kg/ha (67 bu/ac) while Conab is estimating the yield at 4,000 kg/ha or 61.6 bushels per acre. The final yields will be determined if any further rainfall is received, but some of the farmers in the hardest hit areas feel they have already lost 20% or more of their yield potential and counting.

Conab is estimating the safrinha corn crop at 21.6 million tons and the total Brazilian corn crop at 56.0 million tons. In the latest WASDE report, the USDA is estimating the Brazilian corn crop at 55.0 million tons.