Brazil’s safrinha (second) corn crop has attracted a lot of attention in recent years, and with good reason. This crop, typically planted in February after soybeans are harvested, is Brazil’s largest corn production, usually accounting for about 75% of the country’s total annual corn output. Although Brazil’s corn production is only about 30% of U.S. production, Brazil is a strong competitor in export markets and is generally the world’s second largest corn exporter behind the U.S.
This year’s safrinha crop has been behind the eight ball from the start.
The crop was planted 10 to 15 days later than usual due to the late soybean harvest, with nearly 60% of hectares planted after the optimal planting date of Feb. 20. Nearly 20% of the crop was planted in late March – which is usually considered too late to plant corn, but with rising prices, producers decided to roll the dice. Unfortunately for growers in the southern and central safrinha growing regions, rainfall during April and May was well below normal, significantly reducing yield potential. The final blow to the second corn crop came from cold temperatures as the coldest readings in 20 years caused frosts and freezes across south central Brazil June 29 – July 1. This caught about one-third of the safrinha production area and will lead to lower yields and poor quality for corn that was not yet mature.
Estimates of Brazil’s safrinha corn production vary widely with Brazil’s USDA’s counterpart – Conab – estimating production of 66.97 MMTs in its July report vs. 75.05 MMTs for last year’s crop. However, private analyst estimates are significantly lower with Brazilian consultant AgRural at 59.1 MMTs.
The key point for U.S. producers is that the large drop in Brazil’s production will sharply curtail Brazilian corn exports during the next year. USDA is currently projecting Brazil’s corn exports at 28 MMTs, down from 35.23 MMTs a year ago. That projection is likely to be lowered in coming months as the declining crop prospects are fully factored in. Private analysts are forecasting exports in the 20 to 22 MMT range. Exporters have been washing out of (buying back) contracts as a significant amount of newly harvested corn is unable to meet quality specifications and given the higher prices of Brazilian interior markets relative to the export market. Brazil is not offering corn for export beyond October and Argentina will likely reach its projected export commitment in the next month leaving the U.S. and Ukraine as the only major exporters with significant supplies until next spring. USDA raised its projection of 2021/22 U.S. corn exports by 50 million bushels to 2.5 billion bushels in the July report. Look for that number to increase in upcoming reports.