March 31, 2016
The Schmidts, down in Brazil’s southern state of Parana, aren’t like their neighbors. They don’t change their rotation between main-crop corn and beans. Even so, “most of the neighbors have been switching to beans as input costs rise,” says Junior Schmidt, who partners with his dad on their soy, corn and hog operation. “Beans are often the lower-cost option.”
In fact different government agencies estimate main-crop corn production in Parana—Brazil’s top main-crop corn producer -- have dropped from about 2.2 million acres in 12/13 to just 932,000 acres or so in 15/16.
Nationally, the government says Brazilian main-crop corn acres this season will be at 14.2 million acres, down 6.4% from last year.
Meanwhile, second crop is not likely to save the day.
Now, a chunk of that is compensated by the country’s new love affair with second-crop corn. But odd El Nino weather delayed soy planting across much of the country, which, in turn will mean—say government experts—that the second crop corn, or safrinha, will come in at 55,382,400 tonnes, up a mere 1.3% from the last cycle.
That’s made prices where the Schmidts farm shoot up to $5.30 per bushel, as compared to something closer last year at this time to $2.30, corrected for currency fluctuations last year.
Meanwhile DuPont says more exports are on the rise.In a big way. They estimate Brazil exported 20.6 million tonnes of corn in 2014, a number that jumped to 28.9 million last year.
The Schmidts aren’t likely to cash in, at least directly, on the bonanza, as all their corn goes to the hog operation, but Brazil’s small hog and poultry operators are going to need some help. As a result, Brazil’s government plans to dump 160,000 tonnes of corn stocks onto the market in an effort to put some downward pressure on spot prices. On top of that, the minister of agriculture is proposing cutting a couple of onerous taxes on imported corn livestock producers may end up buying.
Brazil is, after all one of the world’s top broiler producers, with a respectably large hog population.
But who knows? You may just end up selling part of your corn crop you’re about to plant to the Brazilians when it’s all over. But I doubt the Schmidts will be among your buyers.
The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.
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