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May 6, 2014

Brazilian Farmers are slow Sellers of their 2014 Safrinha Corn

The safrinha corn in Mato Grosso is developing satisfactorily at least for the time being, but farmers are worried about developing dryness. The rainfall started to diminish during the second half of April and the dry weather has continued into early May. The near term forecast for central Mato Grosso also looks dry as well. As of the end of April, 91% of the corn is pollinating or beyond, 8% is filling grain, and 1% is maturing.

The farmers in Mato Grosso continue to be slow sellers of their anticipated 2013/14 corn production. The Mato Grosso Institute of Agricultural Economics (Imea) estimates that only 11.5% of the 2014 corn production in the state has been forward contracted compared to 17% last year at this time. The disparity between the two years is even greater than the percentages indicate when you consider that this year's production will be much smaller than last year. In absolute terms, the farmers in the state have sold 1.7 million tons of corn as compared to 3.8 million tons last year. In Mato Grosso 35% of this year's soybean acreage was followed by a second crop of corn compared to 46% last growing season.

Imea estimates that the corn acreage in Mato Grosso declined 19% from 3.70 million hectares to 2.87 million. The yield is estimated at 85.4 sacks per hectare (5,127 kg/ha or 80 bu/ac) compared to 101.5 sacks per hectare last year (6,090 kg/ha or 93.7 bu/ac). The total production in the state is estimated at 15.23 million tons compared to 22.53 million tons in 2012/13.

The uncertainty of the corn production and the expectation for higher prices in the future has kept farmers from selling much of their anticipated corn crop. Corn prices in Mato Grosso last week were R$ 15.40 per sack (approximately US$ 3.18 per bushel) for delivery in August and payment in September. Farmers are expecting that the smaller crop in Brazil and the expectation for reduced corn production in the U.S. will lead to stronger prices in the coming months.

Parana is the second leading safrinha corn production state in Brazil and the corn in Parana is rated 93% good, 6% average, and 1% poor. As of the end of April, the corn was 26% in vegetative development, 42% pollinating, 30% filling grain, and 2% maturing. According to the Secretary of Agriculture in Parana, the average corn price in the state is now R$ 23.00 per sack (US$ 4.75 per bushel) compared to R$ 19.00 per sack in May of 2013 (approximately US$ 3.92 per bushel). Corn prices are expected to strengthen in Brazil as supplies of the smaller full-season corn crop start to dwindle before the safrinha corn hits the market.

The safrinha corn harvest in Mato Grosso will start at the end of May and peak in June. In Parana the harvest will also start in late May, but the peak will be later in July and August.