October 27, 2010

Safrinha Corn Accounts for 38-40% of Brazil's Total Corn Prod.

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazilian farmers continue to turn more and more to safrinha corn production to replace the traditional full season corn production. Over the last ten years, the percentage of the Brazilian corn crop produced as the safrinha has increased from 15% of the total Brazilian corn crop in 1999 to 38% of the total in 2009. In central Brazil (Mato Grosso and Goias), nearly all the corn today is grown as a second crop following soybeans. In Mato Grosso for example, the 2010/11 safrinha corn crop is expected to produce 8.7 million tons compared to only 300,000 tons for the full season corn crop.

When soybean production moved into Mato Grosso, farmers had originally intended to grow two or maybe even three crops of soybeans per year. The first and second crop of soybeans would be grown using natural rainfall and the third crop could be grown during the dry season using irrigation. Those plans were upended in 2000 with the introduction of soybean rust into Brazil. The devastating nature of the disease prevented multi soybean crops from being grown in the same field and farmers had to look for alternative crops. Corn was the logical alternative and researchers and farmers developed corn hybrids and production practices that resulted in a significant expansion of safrinha corn production, which continues to this day.

Most of the full season corn continues to be grown in southern Brazil in the states of Parana and Rio Grande do Sul. The farmers in Parana actually plant two significant crops of corn per year. The full season corn crop is planted in September and October and the safrinha corn crop is planted in January and February following soybeans. The safrinha corn crop in Parana is only planted in the northern part of the state. The 2010/11 full season corn crop in Parana is expected to produce 7.5 million tons and the safrinha corn crop in the state is expected to produce 5.8 million. The full season corn acreage in Brazil is expected to decline 3% in 2010/11.

Farmers in Mato Grosso had intended to increase their safrinha corn acreage, but the delayed start to soybean planting may alter those plans. Soybean planting in Mato Grosso has been slow due to a delayed onset of the rains and if pockets of dryness persist in Mato Grosso, it will be difficult to plant all the intended safrinha corn acreage. Additionally, late planted safrinha corn runs the risk of significant yield reductions due to not having enough time to complete grain filling before the onset of the next dry season. Therefore, the safrinha corn acreage in Mato Grosso still might increase in 2010/11, but the total safrinha corn production might end up being disappointing.

Inadequate infrastructure - One of the biggest obstacles to safrinha corn production in Mato Grosso continues to be inadequate infrastructure and the resulting sky high costs of transportation. For the last two years, the federal government has had to step in and pick up the cost of transporting the corn from Mato Grosso to end users and exporters in southern Brazil. Without government transportation subsidizes, it would not be profitable to grow safrinha corn in Mato Grosso. Earlier in 2009 before corn prices started to strengthen, it cost as much to transport corn from central Mato Grosso to the Port of Paranagua as it did to purchase the corn in Mato Grosso.