May 7, 2013

Paraguay Corn Production Increased 1.5 mt due to Larger Safrinha

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Farmers in Paraguay are adopting similar practices that are used in southern Brazil to produce a second crop of corn after soybeans. In recent years, the major emphasis for farmers in Paraguay has been to increase their soybean production, but strong commodity prices have encouraged them to plant a larger second crop of corn as well. Therefore, the Paraguay corn estimate was increased 1.5 million tons this week to 3.5 million.

It is estimated that 80% of the soybean and corn producers in Paraguay are Brazilians that moved across the border over the last thirty years in search of cheap land to expand their operations. Most of the Brazilians settled right across the border from western Parana, so the production practices in Paraguay are nearly identical to those of western Parana. Therefore, as Brazilian farmers in Parana moved to produce more safrinha corn, so too did Brazilian farmers in eastern Paraguay.

The director of the Mato Grosso Institute of Agricultural Economics (Imea) was recently in Paraguay assessing the safrinha corn production in the country. He estimated that the 2012/13 corn production in Paraguay could set a new record at 4 million tons due mainly to an increase in safrinha corn production. The safrinha corn crop in Paraguay is in good condition and the farmers will start to harvest their safrinha corn in late May or early June.

The safrinha corn in Paraguay is planted earlier than it is in neighboring Brazil because Paraguay does not have a 90-day soybean free period like they have in Brazil. This allows farmers in Paraguay to plant their soybeans as soon as the soil moisture is adequate to support germination in August or September. If the soybeans are planted early, then the safrinha corn can be planted early as well. Farmers in Paraguay will start to harvest their safrinha corn during the second half of May, whereas farmers in Parana won't start to harvest their safrinha corn until late June at the earliest.

Farmers in Paraguay also have much better logistics to export their corn compared to farmers in Mato Grosso. Corn exported out of Paraguay is barged down the Paraguay River to the Parana River and then to the river ports near Rosario in Argentina. The cost to transport the corn from Paraguay to the Argentine ports is in the range of R$ 70 per ton. In contrast, the corn produced in central Mato Grosso must be transported two thousand kilometers by truck over poorly maintained highways at a cost of approximately R$ 250 per ton.