July 11, 2005

 

USDA: Brazil Corn Update
 

 

Production for 2004/05 is expected to be 36.5 million tons, with the winter crop forecast at 9 million tons, 2.0 tons lower than the previous Post forecast. Planted area was much lower than expected due to poor producer prices and low soil moisture at planting. 

 

However, weather during development has been mostly conducive as much of the crop received beneficial rains in May and June allowing for a partial recovery from early drought damage. 

 

Post estimates summer corn production at 27.5 million tons, which is down 2 million tons from the Post forecast in March. The fall in production was due to a severe drought in southern Brazil, which especially devastated the crop in Rio Grande do Sul.

 

Post forecasts total 2005/06 production at 43.0 million tons on 12.9 million hectares.  The slight reduction in area and yield forecast from the previous Post forecast is due in part to increasing interest rates that will impact planting decisions. 

 

Corn could replace some soy area due to the increased planting of alternative winter crops. Wheat is generally the winter crop of choice when a producer plans to follow with summer soybeans.

 

However, when corn is planned as the summer crop, producers tend to be less likely to plant wheat but rather plant oats, canola, or titicale in winter. Cooperative agronomists reported that wheat plantings are down by as much as 20 percent.

 

Corn and Soybean Crop Area
(1,000 Hectares)
	Apr-03	May-04	Jun-05
Corn Area	12,800	11,700	13,000
Soybean Area	21,500	22,800	23,000
Total Area	34,300	34,500	36,000
Corn Percent of Total Area	37.3	33.9	36.1

 

Along with a forecast increase in summer corn area, Post expects an increase in yields. Though import costs are still high, they have fallen over the past few months as the strong currency has reduced the price of imported fertilizers and chemicals.  Therefore, the fall in costs should not only stimulate area to corn, as corn is a much more input-intensive crop compared to soybeans, but also lead to higher yields. 

 

Post forecasts 2004/05 (Oct/Sept) exports at just 1.5 million tons compared to 5.8 million tons in 2003/04.  Exports were strong in February and March with nearly 800,00 tons shipped. 

 

However, shipments drastically fell in April and May with only 23,000 tons exported, which is only three percent of exports during the previous two months. 

 

Almost no additional exports are expected through the end of the trade year due to the strong Brazilian currency, rising internal prices due to strong internal demand and short crops, and very competitive prices for Argentine supplies. 

 

Marketing year (March 2005 to February 2006) exports are expected at just 800,000 tons. Meanwhile, Post lowers the 2005/06 trade and marketing year exports to 1.5 and 1.7 million tons respectively.

 

Post has also lowered the 2004/05 marketing and trade year import forecasts to 800,000 tons and 600,000 tons respectively. 

 

Purchases are impeded by the government's tight regulations on imports of biotech corn despite strong pressure from the powerful pork and poultry industries to allow imports. 

 

For the full USDA report, click here.