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Brazil's Corn Output to Bring More Downward Pressure

 

The downward pressure on corn can deepen over the next months considering the projections coming out of Brazil. Brazil's National Supply Company released its report this Thursday (June 11); it forecasts a record production of 49.8 million tons for the second crop and a total of 80.2 million tons in the year. A month ago, the projection was 78.2 million tons. The projection was increased for the fourth time in a row.

For Eledon Oliveira, crop estimates manager at Conab, the output projections for the cereal have increased substantially because of good weather in top-producing states such as Mato Grosso and Paraná.

"There was a delay in planting in both states. But later there was above-average rain for two months. This has pushed the yields up," Oliveira told Agriculture.com. 

The average yields for the country are at 78 bushels per acre for this second corn crop. In Paraná, there is a record of 81.47 bushels per acre. In Mato Grosso, the average is 81.09 bushels per acre.

Farmers from the state of Mato Grosso do Sul Fabio Franco was consulted about his crop plans in February. He confirmed the planting of 3,632 acres and revealed that the weather has been good in his property through June 10. 

"As of now, I don't see any hydrological stress with this good distribution of rains. Productivity is within the expectation. I sold 30% of this crop," reveals Franco.

But market factors also helped to change the minds of producers, according to Steve Cachia, a market consultant at Cerealpar from Curitiba, Paraná.

"Soybeans were paid at a good value in Brazil Reais. The fact that farmers being well remunerated creates a sensation capitalization and changes their posture towards corn," says Cachia when asked by Agriculture.com.

Even though there is this psychological positiveness, Porto Alegre analyst Carlos Cogo has forecast a dark scenario for Brazilian corn growers by harvest. In his view, production might get to 80 million tons building a total stock of 94 million tons. Of those, 55 million tons would be consumed internally, and exports would not overcome 23 million metric tons. If the account is made correctly, there will be a record leftover of 17 million metric tons by the end of 2015 in the country.

"Brazil is the only big producing country that has not a real capacity to store the total production. The big challenge for farmers will be to stock and negotiate the corn and the soybean crops without plummeting prices. Without enough space, freight costs will skyrocket, and the ports will be full," says Cogo in an interview for Agriculture.com.