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November 11, 2015

Conab Increases Brazil Soybean Estimate, Lowers Corn Estimate

In their latest monthly report, Conab increased their already optimistic view of the 2015/16 Brazilian soybean crop and they are now one of the higher estimates in the industry. In contrast, they trimmed their estimate of the 2015/16 Brazilian corn crop due to lower acreage and yields for the full-season corn crop in Brazil.

Conab's November Crop Report estimates that the 2015/16 soybean crop will be 101.1 to 102.8 million tons with a mid-range of 102 million tons. This is up approximately one million tons from October's mid-range estimate of 100.9 million tons and 5.8 million tons higher than last year's production of 96.2 million tons.

The soybean acreage is now estimated at 32.76 to 33.31 million hectares with a mid-range of 33.0 million hectares (81.5 million acres) or 3% more than last year and just slightly more than in their October report. The soybean yield is now estimated at 3,087 kg/ha (44.7 bu/ac), which is up from October's estimated yield of 3,066 kg/ha (44.4 bu/ac) and 1.3 bu/ac higher than last year's yield of 2,999 kg/ha (43.4 bu/ac).

Nearly the entire increase in soybean production from last month is due to improved yield prospects which is very interesting because in their commentary they mentioned how the planting of the soybean crop is being delayed by dryer than normal weather in central and northeastern Brazil.

In the November Crop Report, Conab is now estimating the 2015/16 Brazilian corn crop at 81.08 to 82.73 million tons with a mid-range of 81.9 million tons. This is down 1.2 million tons from October's mid-range estimate of 83.1 million tons and 2.7 million tons lower than last year's production of 84.6 million tons.

All the reduction in corn production was the result of lower estimates for the full-season corn since the estimates for the safrinha corn crop were basically unchanged from last year.

The full-season corn production is estimated at 26.5 to 28.1 million tons with a mid-range of 27.3 million tons, which would be down approximately 9% from last year's production of 30.0 million tons. The acreage for the full-season corn is estimated at 5.5 to 5.8 million hectares with a mid-range of 5.70 million hectares (14.09 million acres), which is down approximately 7% from last year's acreage of 6.1 million hectares. The yield for the full-season corn is estimated at 4,791 kg/ha (73.7 bu/ac) which is 2.2% lower than last year's yield of 4,898 kg/ha (75.4 bu/ac).

In their commentary they stated what everyone already knew, that Brazilian farmers are switching full-season corn production for soybeans due to corn's higher cost of production, lower returns, and higher risks. The biggest reduction in full-season corn acreage occurred in southern Brazil, which is where most of the full-season corn is grown. They also stated that their estimate of the full-season corn acreage might fall even further in subsequent reports due to dry weather which has slowed the planting of the full-season corn in Goias and Minas Gerais.

The estimates for the safrinha corn crop were basically unchanged from last growing season at 54.5 million tons. Conab typically does not release new estimates for the safrinha corn crop until February. In their commentary, they stated that the safrinha corn acreage could be influenced by two diverging trends. In the state of Mato Grosso the soybean planting is being delayed by dry weather and that could eventually result in lower safrinha corn acreage and potentially lower yields. Mato Grosso is the largest safrinha corn producing state in Brazil responsible for approximately 36% of Brazil's safrinha corn production.

In contrast, they noted that the soybean planting pace in the state of Parana was ahead of normal and as a result, farmers in the state could plant their safrinha corn 15 days earlier than average next year. As a result, farmers in the state might end up planting more safrinha corn than expected and the safrinha corn yields could end up being better than average. Parana is the second leading safrinha corn producing state in Brazil responsible for approximately 21% of Brazil safrinha corn production.