FORT COLLINS, Colo.- Brazil’s heavily exported second corn crop has been on the markets’ radar since last year, when the country’s soybean crop was planted later than usual, increasing the chances that corn would go in late since it is planted immediately after the soy harvest.
Those delays worsened earlier this year when soybean harvest came around, as persistent rains kept machinery out of the fields. Second corn was planted at the slowest pace in at least a decade and now weather is threatening to reduce the crop's potential, especially in the south.
Crop conditions have already plunged in No. 2 producer Parana, which grows 15% of Brazil’s second corn crop. As of Monday, just 62% of the southern state’s corn was in good condition, down from 76% a week earlier and 92% the prior week.
April rainfall in Parana is challenging 2018 for the driest April in at least two decades as the forecast for the rest of the month is sparse. Parana’s second corn was also planted very late in 2018 and that crop was in a similar stage as the current one with around three-fourths yet to enter the critical pollination period.
Some 98% of Parana’s second corn was rated as good three years ago this week, but that rating dropped to 43% three weeks later under excessively dry conditions. The score fell to 35% by the end of May that year, and the yields at harvest were more than 20% below normal, one of the state’s worst results.
Due largely to second crop problems, Brazil’s 2017/18 corn harvest fell around 14% from original expectations. That lifted corn exports in the top producer, the United States, to record levels in mid-2018. But the overall crop is not doing as poorly now as it was three years ago.
Farmers in the top corn and soybean state of Mato Grosso planted the second crop unusually late, risking that the rainy season would end before the crop was finished. This month’s precipitation has been a bit below average, though April averages exceed 5 inches (127 mm) in the state. May rainfall is usually less than a third of the April total, and rainfall through next month will be crucial.
Last week, Mato Grosso’s Imea agriculture institute said yields would likely fall from previous predictions since 45% of the state’s second corn was planted outside of the ideal window. That is seen reducing the state’s crop by 1.3% from last year’s strong outcome.
The U.S. Department of Agriculture earlier this month left its forecast for Brazil’s 2020-21 corn harvest at a record 109 million tonnes. Brazil’s Conab statistics body increased its estimate by nearly 1 million tonnes to 108.97 million, though some industry estimates have recently come down.
On Monday, Rabobank cut its Brazilian harvest prediction to 105 million tonnes from 107 million, and analyst IHS Markit reduced its peg to 104 million tonnes from 108.6 million on a large decrease in second crop output.
Brazil’s meat lobby, ABPA, is growing anxious over global commodity inflation and potential supply disruptions to the second harvest. Those concerns influenced Monday’s government decision to suspend import duties on corn, soybeans and soybean products through the end of the year.
In theory, this could benefit U.S. exporters since Mercosur trade bloc countries are already free from tariffs. However, just one U.S. soybean cargo sailed to Brazil last November under the most recent exemption, and that was the first cargo of U.S. corn or soybeans to do so in nearly two decades.
ABPA on Tuesday suggested that corn imports from the United States or Ukraine are possibilities to fill any domestic shortfalls.
(Editing by Dan Grebler) ((email@example.com; Reuters Messaging: firstname.lastname@example.org; Twitter: @kannbwx))