Brazil Faces Corn Shortage Crisis

Total crop losses

SAO PAULO, Brazil-- After Brazilian farmers watched a drought drop 2015/16 soybean yields, the second-corn harvest (safrinha) faces big yield losses due to adverse weather.

While it will turn to the U.S. for some corn imports, Brazil's end users will look to Argentina to fill in the major supply gaps, marketwatchers have recently said.

The hot, dry weather recorded in April has hit cereal crops and dashed the expectations of many producers, particularly in the States of Goiás, Mato Grosso, and Minas Gerais.

“I was really optimistic and planted the corn under good weather conditions. The crop was formed, and suddenly the rains stopped,” Vinicius Costa e Silva Junior, a producer from Piracanjuba, in the state of Goiás, told Successful Farming-Brazil.

Silva Junior, who last harvested corn yields of 114 bushels per acre, can expect total losses in the 2015/2016 season.

“I have been growing corn for 23 years and I've never seen such a severe drought during the second harvest. We have had 60 days of drought here. Even if it does rain now, the crop cannot be saved. The winter corn is completely ruined; we'll have a 100% loss,” he said. “I could make silage with this corn, but it'll be dry silage of poor quality.”

On the Bom Jardim farm, Silva Junior planted 988 acres of corn in the second harvest. Of this total, 383 acres are covered by farm insurance, and the producer has already lodged a claim with the insurer. For the remaining area, Silva Junior must bear the losses, which he estimates at between US $284.00 and $307.00 per acre.

“In order to recover from a year of severe drought like this, we need three years of good harvests.” The losses will be accentuated, in part, because Silva Junior grew another 296 acres of irrigated corn, where he expects to harvest 133.8 bushels per acre, and another 741 acres with late-sown sorghum that should benefit from the return of the rains.

Total Losses

In the state of Goiás, the situation is extreme. Producers have recorded total losses and are renegotiating sales contracts of corn. Nine cities have declared a state of emergency claiming the drought, and the Association of Soybean Producers of Goiás (Aprosoja-GO) has requested that a state of emergency be declared for the whole state.

Previously, a record winter corn harvest had been forecast with 8.2 million tons, well above the 7.6 million tons produced last harvest. Factoring in the losses to drought, the Aprosoja-GO now estimates production of 5.2 million tons at best.

In Mato Grosso, production losses are set to exceed 3 million tons of corn. “We are experiencing a totally atypical year. Late planting of the soybeans due to lack of rainfall in September delayed the corn crop, which was planted outside the ideal window, and irregular rains ensued,” said Nery Ribas, technical director of the Association of Soybean and Corn Producers of the state of Mato Grosso (Aprosoja-MT).

The association visited 188 farms in April. “Many producers had total losses and are already cutting the corn to make silage,” said Ribas. “Higher production costs together with the loss in yield will impact producers' income.”

Those crops planted early were hurt by the drought. At the Nossa Senhora Aparecida farm in Campos de Júlio (MT), producer Cléia Tomé cultivated beans on 691.89 acres of the farm during the first harvest and was able to plant corn in December. He began harvesting this area on May 16 and is seeing good results. “The harvest is going well for this plot, with average yields of 162 bushels per acre,” said the producer.

However, most of Cléia's plantations of second harvest corn, covering 6,424 acres, were affected by the drought. “There was enough rain for the crop, but when the corn started tasseling, the rains stopped,” said Cléia. The producer plans to start harvesting at the end of June and has calculated losses of 30% for this area.

Winter Corn Output Drops Over 3%

According to May estimates by the national supply agency (Conab), corn production for the second harvest is down 3.1% from 54.59 million tons in the 2014/2015 season to 52.90 million tons this harvest.

Brazil faces a dilemma in the domestic market. There were record exports, but corn production was down in the first harvest, giving way to soybean crops. With limited supply of the grain on the domestic market, prices have remained at high levels in 2016.

The ESALQ/BM&FBovespa Index (base Campinas-SP) attained R$ 52.91 per 60-kilo bag on Friday, May 20, a nominal record and 8.76% up for this point in May. However, domestic liquidity is low, as buyers are reluctant to trade at current levels.

According to analysis by the Center for Advanced Studies in Applied Economics (Cepea), many buyers are awaiting the arrival of the produce from the second harvest. Sellers, however, are standing firm and demanding increasingly high prices.

In Paraná and Santa Catarina, there is fierce competition for corn, and the grain has been traded at over $6.42 per bushel. The loss of the second-corn harvest only worsens this scenario, and current estimates indicate that corn stocks will be 51% down on the previous harvest.


Written by Darlene Santiago, Successful Farming-Brazil


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