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Weather May Drop Brazil’s Grain Output

SAO PAULO, Oct 10 (Reuters) - Brazilian farmers will likely produce a smaller amount of corn and soy in the 2017/18 season due to less favorable weather than the prior crop year, food supply and statistics agency Conab said on Tuesday.

In its first forecast for the 2017/18 crop, Conab estimated Brazilian grain production at between 224.1 million tonnes and 228.2 million tonnes, compared with 238.5 million tonnes in the prior cycle. The lower end of the range would represent a 6% drop in output.

"The highly favorable climate conditions that contributed to a record grain output last season are unlikely to be repeated," Conab said in a statement.

Soy and corn will account for about 89% of Brazil's grains output.

The government now expects areas planted with soybeans in Brazil to grow by an average of 2.7% from the prior season to up to 35.2 million hectares.

"Soy has been offering higher liquidity and yield prospects compared with other crops," Conab said.

At the same time, the corn area planted in the summer may drop by up to 10.1% as more farmers decide to replace lower priced corn with soy crops, Conab said.

"Next year's first and second corn crop will be economically viable with reasonable prices ... giving a minimum remuneration so the producer can make new investments," Neri Geller, secretary for agricultural policy at the Ministry of Agriculture, told reporters following the release of Conab's forecast.

Conab forecast that total grain planting area will be stable or grow by up to 1.8% from the prior crop year, with soy and cotton planting contributing to the expansion.

The agency predicted Brazil's soy output at between 106 million tonnes and 108.2 million tonnes in the 2017/18 period, lower than the 114 million tonnes in the prior cycle.

Conab said total corn output will range between 92.2 million tonnes and 93.6 million tonnes in the 2017/18 period, lower than the 97.8 million tonnes in the 2016/17 crop cycle.

 

SCARCE RAINS

Dry weather has slowed grain planting in Brazil early in the season.

Through October 5, farmers had sowed only 5% of the soy area, compared with 11% at the same time a year ago but in line with a five-year average of 6%.

"We have had some problems especially in the Center-West where rains were significantly late,” Geller said. (Reporting by Ana Mano and José Roberto Gomes in São Paulo; Additional reporting by Jake Spring in Brasília; Writing by Ana Mano; Editing by W Simon, Paul Simao and Jonathan Oatis)

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