Sep 16, 2010
Brazilian Farmers Expected to Cut Back on Full Season Corn Acreage
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Only two states in Brazil, Sao Paulo and Minas Gerais, are expected to maintain their corn acreage for the 2010/11 growing season and there is an outside chance that full season corn acreage might actually increase slightly in those two states. In the remainder of the corn producing states in southern Brazil, the full season corn acreage is expected to decline 15 to 20%.
One of the reasons why corn acreage may remain unchanged in these two states is the lack of alternatives to growing corn. These two states combined account for approximately 20% of Brazil's corn production and soybean production is not a viable option for many of these corn farmers. The strengthening corn price may also convince some farmers in these two states to consider even increasing their corn acreage. Corn is usually planted in these two states in late September or early October, but it could be planted as late as the end of October, so there is still time for the corn price to move higher before a final planting decision needs to be made.
For most of 2010, the domestic corn prices in Brazil have been below the cost of production in many regions. An oversupply from last year and disappointing corn exports led to burdensome domestic supplies of corn, but that scenario changed with the drought in Russia and the disappointing corn yields in the U. S. As a result, domestic corn prices in Brazil have now moved above the cost of production for the first time in 2010.
One of the things that may have convinced farmers in southern Brazil to cut back on their full season corn acreage was the forecast by Brazilian meteorologist that the strengthening La Nina will bring dryer than normal weather to southern Brazil during October, November, and December. December is usually the peak pollinating period for corn in southern Brazil and dry weather during December can be devastating for the crop. The last La Nina in 2007 and 2008 resulted in very severe reductions in the Brazilian corn crop.