Brazil’s USDA attache lops 3m mt off corn crop to 89m mt

The USDA's Brazil attache has reduced its 2017/18 corn crop forecast by a further 3 million mt to 89 million mt, just days after the monthly WASDE report revised it down by 2.5 million mt to 92 million.

The move brings the agency into line with other crop forecasts which are starting to congregate in the 88-90 million mt range.

Earlier in the week, AgRural and Conab also revised their crop estimates to 89.8 million mt and 88.6 million mt, respectively.

The reduction means the 2017/18 crop is approximately 10% lower as both the first and second crop area falls and yields “return to average”, the report notes, with the emphasis on corn production shifting increasingly from the first crop to the country’s second, safrinha crop.

“While total corn area in Brazil has expanded by nearly 50% in the last 15 years, first-crop corn area has been shrinking over the last decade,” the report notes, as the lure of soybean production has pushed into the typical corn planting.

That has seen the balance of corn production shift to the second crop – with typically the first crop catering to Brazil’s domestic needs and the second crop catering to the export markets.

The attache also set the 2018/19 corn crop at 90 million mt with expectations of a larger second corn crop, the safrinha crop, pushing corn production higher.

“Many farmers in the Center-West see no downside to planting second-crop corn, even outside the ideal window, because government support programs will guarantee a minimum price,” the report says, a factor that has been felt through the 2017/18 season.

Exports

Teasing corn away from the first crop to the second is likely to have an impact on exports, however, as the domestic demand pulls from the volume that usually powers Brazil’s exports.

The 2017/18 marketing year is likely to see 33 million mt of exports, with that figure dropping to 30 million mt in 2018/19 as domestic corn consumption increases and stocks decline.

Domestic consumption is set to increase to 62 million mt, up 1.5 million, with that figure increasing by the same amount in 2018/19 to 63.5 million mt.