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February 4, 2002
Corn
Acreage Declines
Brazilian farmers acted decisively in
2001/02, significantly reducing acreage planted
to corn in the main summer growing season. Government planting surveys indicate
that summer corn area declined approximately 11
percent, as growers shifted land into more lucrative alternative crops including
soybeans, rice, and black beans. The reduction in national corn area is expected
to result in a year-to-year decline in corn production of more than 5.0 million
tons. USDA currently forecasts
2001/02 corn area at 12.8 million hectares, down 0.77 million or 6 percent from
last year. Brazil’s 2001/02 corn production is currently estimated at 36.0
million tons, down 5.5 million or 13 percent from last year’s record harvest.
The
Two-Crop Corn Season
Brazil produces two seasonal corn
crops, the first in the wet summer months (Oct-Feb) and the second in the
relatively dry winter period (Feb-July). The summer crop is by far the largest,
accounting for about 85 percent of total production. It is also the more productive, with yields outpacing
those achieved during the winter season by a significant margin. Though summer
corn area declined in 2001/02 due to its lower profitability relative to
alternative crops, winter corn area is forecast to rise by roughly 10 percent,
as domestic prices are expected to strengthen over the coming months. Strong
domestic demand from the expanding pork and poultry industries is the primary
factor influencing internal corn prices, and Brazil has a very large appetite
for feed grain. Feed demand for corn in 2001/02 is estimated at 31.0 million
tons, while total domestic demand is estimated at 35.0 million tons.
Given 2001/02 corn production reaches 36.0 million tons, the
supply/demand equation is quite tight.
Moisture Deficit Affects
Southern Crop Yields
Brazil’s corn growing region is widely dispersed
geographically, with the bulk of production emanating from the southern and
central states of Rio Grande Do Sul, Parana, Santa Catarina, Sao Paulo, Minas
Gerias, Goias, and Matto Grosso Do Sul. Together, these seven
states produce over 85 percent of the national harvest. The rainfall pattern
from October-January has been largely beneficial for
the main 2001/02 summer crop, though
some regions have experienced excessive moisture and others serious deficits. On
balance, the general outlook for summer corn production
is quite favorable, as the majority of producing regions have received near to
above normal rainfall.
Despite the generally
favorable current situation, concern mounted during January over declining
regional crop yield and production prospects in the states of Rio Grande Do Sul
and Santa Catarina. Large portions
of these states experienced dry conditions over
an eight week period that coincided with corn’s moisture-sensitive
reproductive growth stages. Corn crops reportedly experienced severe stress as soil
moisture supplies dwindled, with crop yield
in some areas estimated down 20 percent or more.
Fortunately, the region affected by drought was limited to these two
states and did not spread to the neighboring state of Parana, where much more of
the nation’s corn supply is grown. The
drought ended in late January when heavy rains blanketed much of the region,
replenishing soil moisture supplies and halting further crop deterioration.
Though crop losses are reported to be significant in this region, bumper
yields in states north of this area should offset much of the decline in overall
production.
Uncertain
Outlook for Winter Corn Production
Given the generally positive outlook
for summer corn production, attention will soon shift to winter-crop planting
and growing conditions. The Brazilian Government appears to have set a target to
produce a record 8.0 million tons from the winter crop, in a bid to forestall
significant corn imports for its feed industry.
If achieved, this would amount to a 27-percent increase on the record
harvest last year. CONAB has ostensibly adopted this target in its forecast of
national production, indicating that winter-crop area is expected to increase by
roughly 10 percent over 2000/01. However, to achieve 8.0 million tons of
production, analysis indicates average crop yield must rise 14 percent to a new
record high of 2.64 tons per hectare. A
projection of this magnitude implies that favorable weather and ample moisture
supplies are a given, and that growers will significantly increase the level of
costly crop inputs. The Government is attempting to encourage expanded winter
corn plantings and higher fertilizer use through modest releases of additional
production and crop insurance financing, but it remains to be seen whether these
arrangements will have any impact.
USDA analysis of winter-corn
production prospects acknowledges that weather is a very important determinant
of production potential, and that record yields are not a given from the outset
of the season. As witnessed by the
recent episode of drought in southern Brazil, soil moisture supplies can be
rapidly depleted if timely rains are not forthcoming.
It should be remembered that Rio Grande Do Sul started out the summer
with superb soil moisture reserves, which in retrospect aided the crop during
the dry spell and prevented even greater crop losses. Though the major winter
corn producing states in central Brazil currently have good stored soil
moisture, timely winter rainfall and mild temperatures are still required to
achieve above average yields. Farmers were able to produce a record winter-corn
crop of 6.3 million tons last year, though this was largely owing to unusually
ideal winter weather, including above average rainfall and an absence of
damaging frost.
For
more information, contact Michael J.
Shean
with the Production Estimates and
Crop Assessment Division on 202-720-7366
