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June 8, 2021

Recent Rains Came Too Late for Much of Brazil's Safrinha Corn

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The limited rainfall recently received by the safrinha corn crop was generally considered to be too little and too late for much of the crop. In addition to losses caused by drought, the safrinha corn in Parana suffered additional losses due to recent frosts that hit some of the corn that was in a sensitive stage of development.

One concern on the horizon for Brazilian farmers is the fact that the Brazilian currency has been strengthening in recent weeks. At the close of trading last Friday, the Brazilian real was trading at 5.03 per dollar which was 3.4% stronger for the week. This was the strongest finish for the currency since June 10, 2020. A stronger domestic currency generally means that Brazilian farmers put less money in their pockets when they sell their grain.

Mato Grosso Safrinha Corn 4 Million Tons Below Initial Expectations - The technical director of the Mato Grosso Institute of Agricultural Economics (Imea) had originally estimated the safrinha corn production in the state at 36 million tons, but he has now reduced the estimate to 32 million tons with the potential of moving it even lower. The statewide corn yield last year was 109 sacks per hectare (104 bu/ac), but the yield this year is expected to be in the range of 93.8 sacks per hectare (89.4 bu/ac), which would be the lowest in four years.

The areas hardest hit by the dry weather was in southeastern Mato Grosso in the municipalities of Primavera do Leste and Rondonopolis. The mid-north municipalities of Lucas do Rio Verde, Sorriso, and Sinop were also impacted as well as the center-south municipalities of Tangara do Serra and Diamantino.

Farmers in western Mato Grosso have started to harvest some of their earliest planted corn. In the municipality of Sapezal located in western Mato Grosso, farmers think their yields to be lower than initial expectations due to a 45-day period without rain. The corn harvest in the state will peak during July and August.

While the yields might be disappointing, farmers are pleased with the prices. At the start of the 2020/21 growing season, farmers were forward contracting their corn for R$ 35 to R$ 40 per sack (approximately $3.00 to $3.45 per bushel). Farmers still have 30% to 40% of their corn left to sell and the current price is in the range of R$ 80 per sack (approximately $6.85 per bushel).

The state of Mato Grosso is the largest safrinha corn producing state in Brazil responsible for approximately 45% of the total production. While the weather in Mato Grosso has been better than in other parts of Brazil, the dryer than normal conditions have taken a toll on the crop.

Western Parana Corn Yields Could be Down as Much as 35% - The safrinha corn in the municipality of Cascavel in western Parana has been negatively impacted by a series of weather problems. The crop was planted much later than normal and then dry weather slowed its early development. More recently, a frost occurred last week impacting the crop when it was at a sensitive stage of development.

The Director of the Coopavel Cooperative in Cascavel indicated that the dry weather has reduced the corn yield potential by at least 30%. Additionally, a frost that occurred last week probably reduced the yield potential another 5%. Originally the corn yield was expected to be in the range of 100 to 120 sacks per hectare (95 to 114 bu/ac), but yields are now expected to be in the range of 65 to 78 sacks per hectare (62 to 74 bu/ac).

Since the corn was planted, the region has only received about 50% of its normal precipitation with most of the rainfall occurring shortly after planting. From March 15th to May 31st, the region has only received 15 mm of precipitation (0.6 inches).

The Department of Rural Economics (Deral) indicated that earlier last week 8% of the safrinha corn in Parana was in vegetative development, 44% was pollinating, 41% was filling grain, 7% was mature, and 1% was harvested. The corn was rated 32% poor, 46% average, and 22% good.

The main corn harvest will not start until July, so additional yield losses could still occur if there are frosts during the month of June. The state of Parana is Brazil's second largest safrinha corn producer responsible for approximately 17% of Brazil's safrinha production.

On the positive side, the high domestic prices for corn will compensate for some of the yield losses. The current spot price for corn in western Parana is approximately R$ 84.00 per sack (approximately $7.20 per bushel), which is 180% more than the price of corn in June of 2019. While these high prices are good for corn producers, they are negatively impacting chicken, hog, and dairy producers in the region.