USDA lifts forecast for next year’s Brazilian corn crop

July 14th, 2015

By:

Category: Grains, Oilseeds

Corn_Chart450x299(Agrimoney) – The US Department of Agriculture has revised its expectations for next year’s Brazilian corn harvest upward, as the growth of the second season corn crop overcomes a forecast reduction in fertilizer application.

The USDA’s Brasilia bureau has estimated Brazil’s 2015-16 corn production at 79m tonnes, compared to the 77m tonnes forecast by the USDA’s world agriculture supply and demand estimate (Wasde) published on Friday, and ahead of previous estimates of 75m tonnes.

The bureau increased its outlook for next year on the “continued growth” of the safrinha crop.

The safrinha is a late season corn crop, put into the ground after early maturing soybeans are harvested, and it was traditionally the less important crop, hence the name, which means “little harvest”.

According to the USDA, the safrinha crop now accounts for nearly 65% of Brazil’s corn production, and accounts for most of Brazil’s exports.

Four year low

Although higher than previous estimates, this would still leave Brazilian corn production at its lowest point since 2012.

The report said that Brazilian producers “will likely reduce inputs based on the strengthening dollar and continued low global commodity prices”.

A weaker domestic currency, combined with weak crop prices, would act as a distinctive to the use of fertilizer and pesticides, necessary for maximum crop production.

Record crop

However, the bureau noted that Brazilian policy allow producers to be “reimbursed for the difference between market price and the government-set minimum price through auctions,” potentially limiting the effect of low prices.

The USDA’s Brasilia bureau forecast Brazil’s 2014-15 corn production at a record 82m tonnes, citing the “near perfect” weather condition for the safrinha crop. This is an in line with figures in Friday’s Wasde.

Last week the Brazilian government crop supply agency Conab forecast this year’s corn production at 81.81m tonnes, with expectations for the record breaking safrinha crop raised to 51.55m tonnes.

Silo bag storage

The USDA report sees Brazil’s 2014-15 corn exports in line with the Wasde figures, at 26m tonnes, up from 20.97m tonnes last year.

The bureau noted that farm storage may increase thanks to the use of silo bags, which allow farmers to cheaply store grains without constructing new storage capacity.

This would keep some of Brazilian production from immediately weighing on global markets.

The use of silo bags has already encouraged a rapid build-up on on-farm storage of soybeans in Argentina.

Brazilian corn use is expected to increase next year and in 2016, thanks to feed demand from the country’s growing protein sector.

2015-2016 feed consumption is forecast up to 50m tonnes.

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