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October 10, 2014

Conab Releases First Estimate of 2014/15 Brazilian Crop

Conab released their first estimate of the 2014/15 growing season on October 9th and they estimate that the Brazilian soybean crop will increase 3.2% to 7.3% and that the Brazilian corn crop will decline 1.2% to 4.1%.

The Brazilian soybean acreage is expected to increase 1.4% to 5.5% to the range of 30.59 to 31.83 million hectares. They estimate the soybean yield is 2,903 kg/ha or 42.0 bu/ac, just slightly better than last year which was 2,854 kg/ha or 41.3 bu/ac.  The total Brazilian soybean crop is estimated at 88.8 million tons to 92.4 million tons or up 3.2% to 7.3% compared to last year.

Conab's soybean estimate seems to be on the conservative side since most market analysts have the soybean acreage up closer to 5% than to 1%. Additionally, their soybean yield estimate is conservative given the fact that it is only slightly higher than last year when a drought in the states of Parana, Sao Paulo, and Minas Gerais negatively impacted the soybean crop.

For the Brazilian corn crop, they mostly focused their estimates on the full-season corn that is currently being planted. The full-season corn acreage is expected to decline between 4.1% and 10.9% to a range of 5.89 to 6.34 million hectares. The full-season corn yield oddly enough is expected to decline 3% to 4,635 kg/ha (71.3 bu/ac) compared to 4,783 kg/ha last year (73.6 bu/ac). The full-season corn is estimated in the range of 27.2 to 29.5 million tons or down 6.7% to 14.1%.

The full-season corn yield last year was also impacted by the dry weather, so it seems very conservative to be anticipating a lower full-season corn yield this year.

The safrinha corn acreage was left unchanged from last year at 9.18 million hectares while the safrinha corn yield was increased 2.4% to 5,381 kg/ha (82.8bu/ac) compared to last year's yield of 5,255 kg/ha (80.9 bu/ac). The total Brazilian corn crop is estimated at 76.6 to 78.9 million tons or down 1.2% to 4.1% compared to last year. The key to the Brazilian corn crop will be what happens to the safrinha crop which represents approximately 60% of Brazil's total corn production. Brazilian farmers will plant their safrinha corn next January and Febriary.

It was a little surprising that Conab left the Brazilian wheat estimate at 7.67 million tons.  Many analysts are worried that the recent wet weather in southern Brazil will result in lower yields and poorer quality. The wheat harvest in Parana is approaching 50% while the wheat harvest in Rio Grande do Sul is just getting started.