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May 14, 2002
Brazilian farmers acted decisively in 2001/02, significantly reducing acreage planted to corn in the main summer growing season, in favor of alternative crops. Government surveys indicated that summer corn area declined approximately 1.3 million hectares or 13 percent, as growers shifted land into more lucrative crops, including soybeans, rice, and black beans. The reduction in overall national corn area, coupled with drought-affected crop yields in both summer and winter seasons is expected to result in a year-to-year decline in corn production of 6.5 million tons. USDA currently forecasts 2001/02 corn area and production at 12.0 million hectares and 35.0 million tons, respectively.
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 relative profitability, winter corn area rose 17 percent as strong domestic prices encouraged expansion.
Corn productivity in Brazil is highly affected by weather, with the 2001/02 season being no exception. During the main summer growing period, drought conditions occurred from December-January in the key southern producing region of Rio Grande do Sul and Santa Catarina. These two states normally account for roughly 25 percent of total summer corn output, and this event severely stressed crops as they progressed through the reproductive stage. As a result, corn production dropped significantly in these states. Overall national summer corn yields were only down marginally from last year’s record level, however, owing to highly beneficial rainfall in most states outside the drought zone. Summer corn production is estimated to have totaled 29.4 million tons, down 5.8 million from last year.
As the winter season unfolded, farmers were anticipating lucrative returns from corn production and they significantly expanded acreage. The weather pattern became increasingly dry. Drought conditions prevailed in the winter corn heartland of Parana, Mato Grosso do Sul, and Sao Paulo from early March until early May. These three states typically account for 70 percent of winter corn production. Crops experienced severe stress, and losses have been significant. In early May, storms arrived in the region with enough moisture to resuscitate crops, but for many locations the moisture was too late. Local authorities in Parana alone estimate that statewide production potential has been reduced by 1.0 million tons. USDA soil moisture model data indicate that soil moisture reserves in the region were much lower throughout the early winter growing period than those recorded in 1999/00, when a prolonged drought caused winter corn yields to fall to 1.4 MT/Ha. Widespread showers will be necessary in coming weeks to stabilize 2001/02 winter crop prospects and prevent further reduction in production.
The planting period for the 2002/03 Brazilian corn crop is still six to nine months away. Forecasts for 2002/03 corn production at this stage assume that 2001/02 winter corn production will be significantly reduced by drought, setting the stage for continued strong domestic corn prices through the 2002/03 planting period. Current price quotes in southern producing states are at significant premiums to those offered on the export market. Should these hold through the planting period, total 2002/03 corn area is forecast to increase by 1.0 million hectares, rebounding to near-normal levels and erasing much of the soybean expansion that occurred in key southern states last year. The bulk of the increased acreage is currently forecast to occur during the main summer season, when the incentives to sow corn will be strongest. Current corn production forecasts also assume a return to more favorable weather, which will benefit crop yields in both summer and winter seasons. USDA currently estimates 2002/03 Brazilian corn production at 38.5 million tons, up 3.5 million or 10 percent from last year’s crop. Harvested area is estimated at 13.0 million hectares, up 1.0 million or 8 percent from last year. Crop yield is estimated slightly above the 5-year average at 2.96 tons per hectare, and up slightly from last year.
