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November 14, 2016

Conab Lowers Brazil Soy Estimate Slightly, Increases Corn Slightly

In their November Crop Report released last week, Conab lowered their soybean estimate slightly from their October Crop Report and they increased their corn estimate slightly from their October Crop Report. The mid-point of the 2016/17 Brazilian soybean estimate is now 102.5 million tons and the mid-point of the 2016/17 Brazilian corn estimate is now 83.8 million tons.

The mid-point of Conab's 2016/17 soybean acreage is 33.677 million hectares (83.1 million acres) which is about 1.3% more than last year. The November soybean acreage is slightly less than the October estimate (-120,000 hectares). The soybean yield is estimated at 3,045 kg/ha (44.1 bu/ac) or +6% compared to last year's yield of 2,870 kg/ha (41.6 bu/ac). The mid-point of their production estimate is 102.55 million tons or 7.5% more than last year's production of 95.43 million tons. The November estimate is down 0.39 million tons from the October estimate.

The mid-point of the full-season corn acreage is 5.582 million hectares (13.7 million acres) or 3.6% more than last year. The November estimate is up slightly from the October estimate (+117,000 hectares). The full-season corn yield is estimated at 4,981 kg/ha (76.7 bu/ac), which is up 3.8% from last year's yield of 4,799 kg/ha (73.9 bu/ac). The mid-point of the full-season corn production is 27.80 million tons or 1.95 million tons more than last year (+7.5%). The November estimate is up 0.8 mt from the October estimate.

The 2016/17 safrinha corn acreage was left unchanged from last year at 10.53 million hectares (23.6 million acres). The estimated that the safrinha corn yield will increase 37.7% from 3,865 kg/ha (59.5 bu/ac) last year to 5,323 kg/ha this year (81.9 bu/ac). Therefore, the safrinha corn production was also increased 37.7% from 40.71 million tons last year to 56.07 million tons this year.

The mid-point of the total Brazilian corn production is 83.88 million tons or +17.31 million tons more than last year, or +26%. The November corn estimate is 0.81 million tons more than the October estimate.

If the weather during the growing season cooperates, the Brazilian corn estimate could move higher from Conab's current estimate due to primarily increased acreage. The state of Minas Gerais has the most full-season corn acreage followed closely by Rio Grande do Sul with Parana in distant third place. The full-season corn acreage in Minas Gerais is expected to increase 5-10% or more. The planting of the full-season corn in Minas Gerais does not end until sometime in December, so the acreage could still go higher. The full-season corn acreage in Rio Grande do Sul is expected to increase 1-4% with an increase of 10-20% in Parana. Therefore, it is possible that the full-season corn acreage could move higher before the entire crop is planted.

More importantly, it is possible that the 2016/17 safrinha corn acreage could increase as much as 5% due to the very early conclusion of soybean planting in both Mato Grosso and Parana, which are the two largest safrinha corn producing states. This will allow for the safrinha corn to be planted during the ideal planting window. If the safrinha corn is planted early, then the corn yields could be good as well. The combination of early planting and good yields could result in a safrinha corn crop as much as 5-7 million tons more than the current estimate from Conab.