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November 6, 2015

Brazilian Farmers Concerned about Delayed Safrinha Corn Planting

When the Brazilian currency weakened significantly earlier this year, Brazilian farmers took advantage of the improved domestic corn prices to aggressively forward contract their anticipated safrinha corn production. They contracted their second crop of corn even though they had not yet planted their first crop of soybeans. As a result of dry weather delaying the soybean planting, and subsequently the safrinha corn planting, some farmers in Mato Grosso are now worried that they will not be able to fulfill those corn contracts.

In general, farmers in Mato Grosso have forward contracted approximately 50% of their anticipated safrinha corn production, which is 3-4 times more than last year at this time. In recent years they probably would not have reached this level of sales until sometime in February.

In the municipality of Primavera do Leste, which is located in southeastern Mato Grosso, a lack of consistent rainfall has slowed the early soybean planting. Approximately 20% of the soybeans have been planted compared to last year when farmers were wrapping up their soybean planting at this time. In the same municipality, some farmers have already forward contracted as much as 60% of their anticipated safrinha corn production and they are concerned that they will not be able to plant their safrinha corn in time to achieve optimum yields.

If they plant their soybeans later than normal, then the soybeans will not be harvested in time to plant the safrinha corn by the end of February, which is when the ideal planting window closes. Many farmers in the region already know that they will be planting their safrinha corn in early March, which increases the risk of lower yields.

Normally the summer rains in Mato Grosso end in late April or early May, but for the last several years, the rainy season has been extended into late May or early June resulting in record corn yields. Farmers are concerned that the rains may end at the normal time this year due to a fading El Nino, which could result in disappointing corn yields especially if the corn is planted in early March.

AgRural reported that farmers in Mato Grosso had plated 38% of their anticipated soybeans as of late last week, which is approximately 20 percent behind the average planting pace.