Nov 11, 2010
Corn Acreage in Sao Paulo Pressured by Sugarcane Expansion
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The 2010/11 full season corn acreage in the state of Sao Paulo fell for the second year in a row. In 2009/10, farmers in the state planted 597,000 hectares of corn, which was 70,000 less than in 2008/09. Estimates are that during the current growing season corn acreage in the state could fall again by as much as 15-20%.
Several factors have led to the decline in corn acres in Sao Paulo including: poor corn prices, expansion of sugarcane production, increased interest in soybean production, and a lack of liquidity in the corn market.
Until just recently, domestic corn prices in Sao Paulo have been very low due to an excess of corn supplies. The recent improvement in corn prices did not come soon enough for farmers in the state to reverse the downward trend.
The ever expanding sugarcane acreage is also a factor for reduced corn acreage. The state of Sao Paulo is responsible for about 60% of the sugarcane acreage in Brazil and the crop continues to expand in the state. When a new sugar/ethanol mill is constructed, nearly all the cropland in a radius of 10-15 kilometers from the plant is planted to sugarcane. Sometimes the mill owners rent the land and sometimes they purchase the land in order to better control the production. Either way, a new sugar/ethanol mill needs 40-50,000 hectares of sugarcane to supply it needs.
Most of the new sugarcane acreage has come at the expense of pasture land, but some row crops have been displaced as well, although to a much lesser extent. With strong sugar prices and foreign capital flowing into the country, it is expected that the sugarcane expansion will continue.