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November 9, 2011

Shortage of Top-tier Corn Hybrids for 2011/12 Safrinha Crop

Farmers in Brazil who are planning to increase their safrinha corn acreage may have a hard time finding enough seed of top-tier corn hybrids to meet their needs and they may have to settle on their second choice. Many retailers in Mato Grosso are reporting that they are already sold out of the most popular corn hybrids and they are now selling older hybrids with less advanced technology or hybrids with lower quality seed. The problem stems from the fact that farmers in Brazil increased their full-season corn acreage much more than what the seed companies had anticipated which is now leading to a shortage of seed for the safrinha corn crop.

In the municipality of Sorriso, located in central Mato Grosso, retailers are completely sold out of the top-tier corn hybrids and farmers who have not yet purchased their corn seed will have limited options. For the late purchasers, they will have to buy older corn hybrids with less advanced technology or corn seed of lower quality (lower germination). One retailer stated that 10% of his seed sales have already been seed of lower quality. Last year he sold 13,000 bags of seed corn and he has already sold 16,000 bags thus far in 2011 and expects to sell a total of 20,000 bags. One large retailer in central Mato Grosso estimates that 60% of the corn planted this safrinha will be the most modern technology and 40% will be older technology.

In more normal times, farmers purchased their seed corn when they were getting ready to plant their safrinha corn crop. The big difference this year is that nearly 50% of the anticipated safrinha corn production has already been forward contracted and farmers used some of that money to also purchase their inputs ahead of time. Monsanto has already announced that they will run short of their newest hybrids, but that older hybrids will be available. They estimated that 70% of the seed corn sold last year in Brazil had at least one biotechnology trait and that this year it may hit 90%.

The Mato Grosso Institute of Agricultural Economics (Imea) is estimating that the safrinha corn acreage in Mato Grosso will increase 14% and that the total acreage will be slightly more than two million hectares and the total production will be 9 million tons (Conab is currently estimating 7 million tons of production).

I think farmers will be able to plant all the corn acres they want. They may not get all the hybrids they want, but they won't be giving up much yield potential by utilizing hybrids with slightly older technology. If they want to plant corn, I am sure the seed companies will find a way to supply them with seed and everything appears to be on track for a huge increase in safrinha corn production.