March 14, 2014

Brazil's corn output is at risk as rainfall returns

Output from corn-growing areas of Brazil, the world's second-largest exporter, is being threatened by returning rainfall, after dryness earlier this year delayed planting of the country's second annual crop, Bloomberg reports.

While dryness in most producing areas in the month to February 15 delayed sowings, the return of rain compounded the lack of sunshine to slow crop development, according to Marco Antonio dos Santos, an agronomist at Sao Paulo-based weather forecaster Somar Meteorologia. Too much rain in Mato Grosso, the biggest producing state, meant growers could not harvest their soybeans in time, which postponed replanting of fields with corn.

"When it's wet you just can't run the planters, everything washes away and it just gets muddy," said Christopher Narayanan, an agricultural commodities analyst at Societe Generale SA in New York.

Farmers in Brazil are planting the second of two annual crops, which is usually harvested starting in May. The so-called safrinha crop last year accounted for 57% of total output, government data show.

Brazil will produce 69 million tonnes of corn in total from both crops in the 2013-14 season, according to Societe Generale. That is lower than the 70 million tonnes forecast by the United States Department of Agriculture (USDA) and compares to the Brazilian government's estimate of 75 million tonnes.

Mato Grosso do Sul is the only state where plantings are running ahead of average.

Brazil's corn exports may be about 20 million tonnes, about 20% less than the prior year, the USDA estimates. The country's shipments will be about half the size of those in the US, the largest exporter at 41.3 million tonnes. The US harvest in 2013-14 was a record 353.7 million tonnes, USDA data show. Global supplies of corn are ample, and prices probably will not rally unless weather problems arise during the next US growing season after planting starts in April, said Chris Gadd, a London-based commodities analyst at Macquarie Group Ltd.

"A 10 million or five million tonne swing is not going to change the global supply and demand," he said. "The market might react to it as noise, but at the end of the day there's going to be far more important factors. It's a drop in the ocean compared to whether we have good or bad pollination in the US," he added.