Sep 15, 2010
Brazilians Continue to Switch from Full Season to Safrinha Corn
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Farmers in southern Brazil are expected to continue reducing their full season corn acreage in 2010/11 in favor of additional soybean acreage and dry bean acreage. Even though corn prices have rallied internationally over the last few weeks, it probably has not been enough to convince farmers in southern Brazil to retain all of their full season corn acreage.
Collectively, the full season corn acreage in Brazil is expected to decline 6.8% nationwide and that is on top of a 16.5% decline during the last growing season. The Department of Rural Economics in the state of Parana estimates that the full season corn acreage in the state will decline by 15% in 2010/11 compared to the previous growing season and the total corn production will decline 20% compared to last year. In the state of Rio Grande do Sul, the Extension Service is estimating that the full season corn acreage will decline 3.7% compared to last year and the corn production will decline 17%. Yields are expected to decline more than acreage due to the anticipated dry weather associated with La Nina.
While the full season corn production continues to decline, just the opposite is occurring for the safrinha corn crop in Brazil. During the 2009/10 growing season, Brazilian farmers produced 34 million tons of full season corn and 20 million tons of safrinha corn. Last year, 37% of Brazil's corn crop is grown as a second crop following soybeans. The safrinha corn crop is expected to be an even higher percentage for the 2010/11 growing season.
The primary reason for the reduction of full season corn acreage is the low domestic corn prices in Brazil. Even with the reduced full season corn acreage last year, the 2009/10 Brazilian corn crop was 3.3 million tons greater than the 2008/09 crop and the increased supply resulted in domestic corn prices that were below the guaranteed minimum price set by the government. As a result, the Brazilian government has purchased 10.6 million tons of corn from the farmers in a series of auctions that started last March. The entire process of selling corn to the government is cumbersome and time consuming and many farmers would just prefer to grow soybeans instead.