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June 3, 2016

Estimates of the Safrinha Corn Crop in Brazil Continue to Decline

Domestic corn prices in Brazil have fallen slightly since the start of the safrinha corn harvest. The July/16 soybean contract at the BM&F Bovespa in Sao Paulo closed Thursday at R$ 45.70 a sack with the September/16 contract closing at R$ 42.65 a sack, down 0.3 and 1.4% respectively. The prices are expected to fall somewhat more, but not very much because of the shrinking size of the safrinha corn crop.

The Mato Grosso Institute of Agricultural Economics (Imea) estimated in their latest bulletin that a little more than 1% of the crop in the state had been harvested. Imea is now estimating the Mato Grosso corn yield at 83.4 sacks/ha (77.0 bu/ac), which is down 8% from their estimate of a month ago. If verified, the statewide yield in 2015/16 would be down 23% or 25.2 sacks/ha (23 bu/ac) from 2014/15. The northeastern part of the state was impacted the most from the dry wheather and the safrinha corn yield in that region is estimated to be down 35.7% compared to last year.

Imea is now estimating the 2015/16 safrinha corn crop at 21.24 million tons, which is down 1.85 million tons from their 23.09 million ton estimate of a month ago.

In Parana, the Department of Rural Economics (Deral) estimated earlier this week that 1% of the corn had been harvested and they estimated the crop at 12.1 million tons, which is down from 12.9 million tons estimated initially. The biggest losses are in the northern part of the state that suffered a severe dry period early in 2016.

Conab is estimating the safrinha corn crop at 52.9 million tons, but that is expected to decline in their next report which will be released on June 9th. In April, Conab estimated that Brazil would export 30.4 million tons of corn during the next marketing year. That estimate is now viewed as overly optimistic with many market analysists expecting Brazil's corn exports to fall to 23-25 million tons.

Brazil will export less corn during the next marketing year because the tight domestic market is expected to support domestic corn prices during the 2016/17 growing season. During the month of June, as much as 25 million tons of safrinha corn will be harvested in Brazil, which should temporarily help to relieve the tight domestic supply. Unfortunately, domestic corn supplies are expected to tighten again later in 2016. The corn situation in Brazil is not expected to stabilize until the 2017 safrinha corn is harvested in June and July of 2017.