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May 9, 2018

Brazil Safrinha Corn Continues to be impacted by Dry Weather

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

The biggest problem for the safrinha corn in Brazil is in southern Brazil, especially in the states of Parana and southern Mato Grosso do Sul. There were a few light scattered showers over the weekend in parts of these two states, but not enough to change the overall trajectory.

The forecast is calling for only light amounts of rain this week before an increased chance of rain this coming weekend. If that turns out to be the case, it is possible that some areas of Parana will be about 6 weeks since the last significant rainfall. Temperatures during the first 3-4 weeks of current dry period were on the cool side, but temperatures during the last 2-3 weeks have be warmer than normal.

According to the president of the Soybean and Corn Producers Association of Mato Grosso do Sul (Aprosoja/MS), some areas of the state have now been dry for over 30 days and some of the corn leaves are fired up to the ears. The situation would had been worse had it not been for good soil moisture at the start of the growing season. As a result, the earliest planted corn is probably going to have an acceptable yield, but the yields will decline the later the corn has been planted. The latest planted corn will have the most disappointing yields because it has basically been dry ever since the corn was planted.

In some municipalities of Mato Grosso do Sul, the corn yields could be down as much as 40% to an estimated 68 sacks per hectare (63 bu/ac). If it doesn't rain in the near future, the yields could decline even more than that. The safrinha corn was planted late in many parts of the state, but even with the late planting, farmers had been expecting yields in the range of 85 sacks per hectare (78.5 bu/ac).

In Mato Grosso, the Mato Grosso Institute of Agricultural Economics (Imea) reported last week that 27% of the safrinha corn was filling gran and that 7% was maturing. The earlier planted corn in Mato Grosso had ample soil moisture during its development, but the later planted corn will still need additional rainfall during the month of May.

In southern Goias, the last rain was three weeks ago and there is virtually no rain in the forecast for this week. The same can be said for western Minas Gerais where most of the safrinha corn is produced in the state. Yields for the safrinha corn in both states is being impacted by the dry weather and the final yield will depend on when they receive the next significant rainfall.

Corn right now in Mato Grosso is selling for approximately R$ 22.32 per sack (approximately $3.00 per bushel) compared to last year at this time when it was selling for R$ 19.28 per sack (approximately $2.65 per bushel). The price of corn for July delivery with payment in August is R$ 20.10 per sack (approximately $2.70 per bushel). For the last three months, the price of corn in Mato Grosso has been above the minimum price set by the government which is R$ 16.71 per sack (approximately $2.30 per bushel).

The price for corn with immediate delivery in Mato Grosso do Sul is in the range of R$ 31.00 to R$ 32.00 per sack (approximately $4.26 to $4.40 per bushel). The price for corn delivered in July is R$ 28.00 per sack (approximately $3.85 per bushel).

Corn futures increased on the BM& F Bovespa Exchange in Sao Paulo in response to the continued dryness in the safrinha corn producing regions of Brazil and continued weakness of the Brazilian currency. As of noon Sao Paulo time on Monday, the May corn contract was trading at R$ 41.60 per sack (approximately $5.40 per bushel) and the September contract was trading at R$ 40.00 per sack (approximately $5.20 per bushel). At noon on Monday, the Brazilian real was trading at 3.54 to the dollar.

The safrinha corn crop in Brazil is going to be disappointing, it's just a matter of how disappointing and that will depend on any future rain.