South America Calling

Following the drought-ravaged corn and soybean crops in 2018, South American production appears to be headed for sharply higher production totals in 2019. Throughout much of the growing season thus far, both Argentina and Brazil have been blessed by mostly favorable conditions. Assuming the beneficial weather pattern extends into May, the handwriting is on the wall. Here's a look at where each country stands:

BRAZIL

Corn:

Brazil looks to produce a corn crop that ranges from 91 million metric tons (mmt), or 3.58 billion bushels (bb), on the low side to 99 mmt (3.89 bb) on the high side. USDA, in its March report, pegged Brazil's total corn crop production at 94.5 mmt (3.72 bb). This is roughly the average trade estimate. That compares to 82 mmt (3.23 bb) in 2018 -- a gain of 12.5 mmt (492 bb). The jury is still out, and with continued beneficial weather for pollination in April, the final production could go higher. Due to the very favorable growing weather for Brazil's second-crop corn (safrinha), which comprises roughly 70% of production, and pollination just under way, the prospect for even higher final production is in the cards. Brazilian agricultural statistics group CONAB has Brazil's corn crop estimated at 92.8 mmt (3.65 bb).

Soybeans:

Brazil looks to produce a soybean crop that ranges from 112.5 mmt (4.133 bb) to 118 mmt (4.336 bb). USDA, in its March report, estimated the crop at 116.5 mmt (4.280 bb). This is very close to what the average trade estimate is now. IEG Vantage (Informa)'s soybeans estimate is at 114.5 mmt (4.207 bb), but just last week, Ag Rural raised its Brazil production number to 118 mmt (4.336 bb), based on desirable weather for late-filling soybeans. If we call it 116.5 mmt, that is 4.3 mmt (158 mb), or nearly 4% below last year's revised record large crop. Brazilian agricultural statistics group CONAB has Brazil's soybean crop estimated at 115.4 mmt (4.240 bb). As of March 29, 70% of the Brazilian soy harvest was complete.

ARGENTINA

Corn:

Argentina's corn crop has also had a favorable growing season, and with over 12% of the corn harvest complete, the yield reports are much better than expected. USDA, in its March report, pegs Argentine corn at 46 mmt (1.81 bb) -- up 14 mmt (551 mb), or 44% higher than the crop of 2018. Due to early corn yields, which are exceeding expectations, there are some private estimates from cash-connected commission houses of a final crop of 49 mmt to 50 mmt (1.929 bb to 1.968 bb) -- record large.

Soybeans:

Argentina's soybean crop has been growing under mostly beneficial weather this year, and the range of estimates is 53 mmt to 56.5 mmt (1.95 bb to 2.07 bb). Using USDA's number of 55 mmt (2.02 bb), which is likely the trade average estimate, that compares to the drought impacted crop of just 37.8 mmt (1.389 bb) in 2018 -- a gain of 17.2 mmt (632 mb), or near 46%.

CONCLUSION

The combined corn crops of both Argentina and Brazil, using USDA estimates, is expected to be at least 26.5 mmt (1.043 bb) higher than last year. The potential is there for a gain of as much as 27 mmt to 29 mmt (1.062 bb to 1.141 bb), assuming good pollination and filling weather. The jury is still out.

The combined soybean crops of Argentina and Brazil, using USDA estimates, is roughly 13 mmt (478 million bushels) higher than last year. The potential is there for a gain of up to 15 mmt (551 mb), with good filling weather on late-developing soybeans.

Needless to say, other than Brazil's soybean crop falling from early season record-large estimates of more than 120 mmt due to early dryness, the combined South American soybean and corn harvests look to be bountiful in 2019.

Dana Mantini can be reached at Dana.Mantini@dtn.com

Follow him on Twitter at @mantini_r

(ES/AG)

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