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May 10, 2013

In May Report Conab Lowers Brazil's Soy Est. Increases Corn Est.

In their May assessment of the Brazilian soybean crop, Conab lowered the Brazilian soybean estimate 0.43 million tons from 81.94 to 81.51 million tons. The nationwide average soybean yield is now estimated at 2,941 kg/ha (42.6 bu/ac), which is down slightly from last month when it was estimated at 2,957 kg/ha (42.9 bu/ac).

The reason stated for the slight decline was disappointing yields from northeastern Brazil where dry weather reduced yields in Bahia, Maranhao, and Piaui. The yield in Bahia is now estimated at 2,100 kg/ha (30.4 bu/ac) which is down 26.6% from last year, Maranhao's yield is estimated at 2.877 kg/ha (41.7 bu/ac) down 2.4%, and Piaui's yield is estimated at 1.949 kg/ha (28.2 bu/ac) down 31.4%. Regions of northeastern Brazil experienced dry weather during much of January and February when the crop was setting pods and filling pods.

The Brazilian corn crop is now estimated at 78.0 million tons, which is an increase of 0.54 million tons compared to last month. The higher corn production resulted from an increase in the safrinha crop now estimated at 43.18 million tons or 55% of Brazil's total corn crop. The top four safrinha corn producing states are Mato Grosso, Parana, Mato Grosso do Sul, and Goias with 39%, 27%, 15%, and 10% of the total safrinha corn production respectively.

The safrinha corn acreage increased 15.6% to 8.8 million hectares and the nationwide average yield is now estimated at 4,904 kg/ha (75.5 bu/ac). The full-season corn acreage in Brazil declined 9% to 6.8 million hectares and the average yield is now estimated at 5,060 kg/ha (77.9 bu/ac). The full-season corn yields were held down by dry weather in northeastern Brazil particularly in the state of Bahia, which is the largest corn producing state in the region.

The trend throughout all the major grain producing regions of Brazil has been to plant more early maturing soybeans allowing enough time for expanded safrinha corn acreage.

Conab is estimating that Brazil's corn exports will fall to 15 million tons during the current marketing year from 22.3 million tons last year resulting in a carryover of 17 million tons compared to 5.8 million tons last year. Private analysts are not as pessimistic and they feel that Brazil's corn exports will be more than 17 million tons.

Regardless of the final total, Brazil's corn stocks are going to increase significantly and domestic corn prices already reflect this big increase. Corn prices in Mato Grosso are already nearly equal to the cost of production and they are expected to move even lower when harvest begins in June. As a result, the Brazilian government is expected to conduct a series of auctions where they will purchase corn from producers at the guaranteed minimum price which is approximately US$ 3.00 per bushel.