Column: Dry weather in Brazil tests bumper corn crop prospects

A corn harvest is seen at the Cercado Grande farm, where an expansion in grain cultivation led the farm to abandon a contract with a sugar factory for planting cane in Itajai, Sao Paulo state, Brazil April 1, 2018 REUTERS/Marcelo Rodrigues Teixeira

NAPERVILLE, Illinois, May 4 (Reuters) – Brazil is expected to see a record maize harvest this year after drought ravaged the country’s soybeans just months ago and its maize a year ago, but drought again threatens to limit the potential of its second crop.

Brazil is generally the second largest corn exporter behind the United States, and these supplies come mainly from its second crop which accounts for three-quarters of annual production.

Four states are responsible for at least 87% of the world’s second-largest corn crop, and Mato Grosso’s top producer just had one of its driest Aprils on record. Sowing there has been faster than normal this year, with nearly 90% complete by the end of February.

In the crop-rich northern region of Mato Grosso, the April rains were the second driest in more than two decades after 2016. Coupled with hot temperatures, second maize yields fell by 30% in 2016 , but late sowing was also a problem.

In the past two decades, Mato Grosso maize yields have been good in only one of six years when April rainfall was particularly low, and that was based on the abundant moisture in May. Showers could arrive early next week, although weather models are mixed on those chances.

Rainfall in May is only a third of that in April due to seasonal patterns in Mato Grosso, although if the dry period begins earlier than normal, heavy rains are less likely to return. The mid-western state accounts for about 45% of the country’s second largest maize crop.

The weather was worse in the nearby town of Goias, which produces 12% of the second corn. April rains were less than 40% of normal in its main growing areas, and the following two weeks could be as little as 0.5 inches (12.7 mm).

Another 18% and 12% of the second corn comes from Parana and Mato Grosso do Sul, respectively, and those states saw more rain than normal last month. Both should be dry for the next 10 days, especially the Parana, although the crop is doing well so far.

The agricultural agency of Parana assessed 92% of its second maize in good condition on Monday, against 96% a week earlier. About 42% of the crop was in pollination and 32% was in grain filling, and 24% was awaiting pollination. Heat, which can disrupt pollination, is not expected in the coming week, but drought should be monitored.

However, the good rainfall so far should provide a cushion. Second Parana maize yields usually reach or exceed averages when April moisture is plentiful, and subsequent yield losses are modest if May rains are too light.

Second maize yields in Parana last year were down 50% from the previous cycle as April saw virtually no rain and very late planting led to late season frost damage . Dry weather in late 2021 and early 2022 reduced Parana soybean yields by more than 40% for the year.

ESTIMATES, EXPORTS

Maize exports from Brazil in the 2020-21 marketing year were 40% lower than the previous season due to the poor harvest. The U.S. Department of Agriculture forecast exports for 2021-22 at a record 44.5 million tons, more than double the previous year.

This assumes a full harvest of 116 million tonnes, perhaps too high given recent and forecast weather conditions. The USDA may update this figure next week, although any reduction in harvests could also dampen exports. Last month, Conab in Brazil pegged the harvest at 115.6 million tonnes.

Such a large total crop would significantly exceed the previous peak of 102 million tonnes set two years ago and is mainly based on a 6% increase in the area sown from last year’s record. The full harvest reached only 87 million last year after a very low second harvest.

Last year, it was a foregone conclusion that a slippage in the Brazilian crop would lead to increased US corn export sales, but that was not the case. High prices and the relatively cheap cost of alternatives, which included wheat at the time, were possible reasons.

The fourth largest corn exporter, Ukraine, is largely offline and its recovery date is unknown, so importers may need to increase their dependence on US and Argentine supplies in the coming months if Brazil’s harvest was insufficient.

Ukraine and Brazil share key customers in Egypt, Iran and Spain, although the main Ukrainian buyer, China, does not currently import South American maize due to phytosanitary restrictions. Japan and South Korea are the common ground for Brazilian and US corn, and US exporters have the advantage of proximity to the Mexican market.

Maize exports from Brazil typically peak around August after the second harvest.

Karen Braun is a market analyst for Reuters. The opinions expressed are his own.

Editing by Matthew Lewis

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