Brazilian crop projection of corn cut to 119.3 million tons

Brazil’s 2022 crop has an excellent production bias. In this November update, Safras & Mercado reduced its forecast from 122.5 to 119.3 million tons of potential. The cut could suggest some concern. However, for the time being, this is just an adjustment to what is happening at the moment in terms of the profile of the area to be planted and technology. The combination of the summer crop in good progress and the second crop in a good window keeps projections positive for this year. The doubt is really about the technology profile to be applied by growers to the next second crop.

The Brazilian summer crop is forecast to take place under good to excellent conditions. The rains in September and October occurred within the possible schedule for summer planting and crop development. The first half of November continued with excellent conditions for development between Santa Catarina and the Northeast region of Brazil, as well as in Paraguay. So far, no severe problem has been detected in Brazil’s Center-South for this summer, but reaped corn should only reach the market from March.

Rio Grande do Sul was mentioned last week as a potential candidate for production losses. Well, the phase of most crops in the west of the state is really decisive, under pollination and going into silking, while later crops are already entering the early stage of pod filling. Therefore, this stage is really decisive for production.

Areas with more problematic soil and less technology may suffer from a few days of drought. However, it rained in most of the state last week. For the time being, we are far from any potential loss of general production in the state, considering that December will be an important month for these crops that are in process of silking and pod filling. It needs to rain.

Therefore, the summer crop in the Center-South region is now estimated at 25.7 mln tons against 21.6 mln tons in 2021, awaiting, of course, the weather conditions of December and January. The situation is also very comfortable at the moment for Matopiba’s summer crop. 2022 second crop, in turn, offers the first big sign of good production potential, which is the planting of soybeans in a good window. This offers a harvest condition for soybeans already from January. The first crops in Mato Grosso are usually followed by cotton planting, but they keep a very good space for planting the corn’s second crop.

The key point for the 2022 second crop is that we are still very much dependent on this scenario of the input market, be it in terms of price conditions or deliveries. Growers needed to accelerate sales of available corn, to buy raw materials in cash to have some guarantee of delivery in time for planting in 2022.

Production costs are rising to levels of BRL 55 to 65 a bag depending on the degree of technology, but applying technology. With market prices ranging from BRL 60 to 75 a bag depending on the region for the 2022 second crop, the situation is looking tight to ensure positive results. Failing to plant is unlikely. In some locations in Paraná, Mato Grosso do Sul, and São Paulo, wheat may be an alternative for having lower costs and better prices at this time.

So, the 2022 second crop area should not show growth this year, at first. We should reflect that there is still time for this decision, and maybe it will involve the arrival of inputs to growers by January. Moreover, they expect an improvement in prices to make the barter viable and move forward with planting decisions. With difficulties in guaranteeing the delivery of inputs and with lower prices for the 2022 second crop, barter business ended up being slower this year, and this also impacts the planting decision.

So, the area to be planted will practically remain stable compared to last year, which is an area very close to a record. The big doubt, which is hard be evaluated in numbers, is the cut in technology, which will inevitably occur on the average of national crops. With good sales of seeds, already carried out in all second-crop regions, the only question is the technology use. Therefore, we are containing for a little longer the productivity projections for the second crop and we should monitor the situation in the first half of next year. A crop with the application of lower technology, to reduce costs, in a good climatic condition, could bring productivity averages of 70 to 90 bags/hectare for this 2022 second crop. Of course, next fall will define this production scenario. Besides, this situation is not generalized, as many growers had already purchased inputs and guaranteed the planting. This whole situation also involves the second crop in Matopiba, which, at first, could have the same production profile.

Thus, the Brazilian crop with 119.3 million tons must be a new record, despite being lower than the previous estimate.


SAFRAS & Mercado

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