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Brazil’s Fast Bean Planting Means More 2017 Corn

Brazil’s planting season benefits from ideal weather

Brazil farmers are experiencing their fastest soybean planting season in history because of favorable weather.

But this also means that the country’s second corn crop, planted in the winter right after soybeans are harvested in the center-western part of the country, may well be huge and create pressure for the corn market until the middle of 2017.

In recent weeks, INTL FCStone warned observers that soybean planting already reached 30% of expected area, while the usual time to reach this percentage was by the second week of November — a clear indication to make room to plant more corn in the second corn crop in the ideal window for the winter. As of Monday, according to the latest national estimate made by AgRural, soybean planting has reached 73% of the area with a delay in southern states, where corn is just harvested in the summer.

“With a high price of corn in the domestic market, there is significant incentive to amplify the planting of that grain in the second crop. It was early on that producers sensed the opportunity to grow a larger second corn crop area,” said the Market Intelligence director at INTL FCStone, Thadeu Silva, in a press release.

Porto Alegre market analyst Carlos Cogo projects a recovery of the Brazilian corn production for the 2016/2017 season with 84.9 million tons of volume. Of those, 55.5 million tons would be consumed in Brazil, and the remaining 25 million metric tons would be exported. Therefore, the final Brazilian stocks would jump 110%. The exports would jump 4 million metric tons, far from the 2014/2015 record of almost 50 million metric tons.

“There is a scenario of corn market pressure for both mid- and long-term because there may be more supply in Brazil, more competition from Argentina, and lower future prices because of the record U.S. crop,” assesses Cogo for Agriculture.com.

Cogo’s forecast for exports is in line with the USDA’s October WASDE that predicted Brazilian corn exports of 55.5 million metric, which is just 500,000 tons of difference. For Laura Geller, USDA agricultural attaché in Brasília, the South American country will not take U.S. market share. Instead, she thinks that U.S. corn will gain market in Brazil.

“Brazil may become a market for U.S. corn this year due to the domestic tight supplies,” the attaché told Agriculture.com.

In fact, Brazil’s National Technical Commission of Safety (CTNBio) has allowed the entrance of genetically-modified corn in Brazil, and the U.S. has a quota of 1 million tons without tariffs.

For Don Roose of U.S. Commodities Inc., the U.S. marketing strategy should be aggressive in 2017, and that may help America keep its market share. “U.S. producers will be aggressive sellers of corn in the winter months, regardless of weather issues around the world. The U.S. producer will need money in the winter. The U.S. producer selling corn will keep prices low and very competitive in the world markets,” Roose said.

He agrees that the recovery of corn prices would not happen so soon. “Corn supplies in the U.S. are bloated. Brazil had supply issues last year due to weather problems. Brazil’s jump in production this year will only add to the world burden if they harvest a large crop. Brazil will not be forced to go to the world market for corn supplies. It will be a pile-on situation at some point. Without weather issues someplace in the world, acres will need to be reduced,” forecasts Roose.

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