South America Calling

Brazil to Plant More Soy and Corn in 2016-17

High prices will prompt summer corn to rob soybean area in southern Brazil during the upcoming 2016-17 season, according to Agroconsult, a local farm consultancy.

But expansion elsewhere will mean soybean area also grows, said Andre Pessoa, an Agroconsult director, during an agribusiness event in Sao Paulo Monday.

First-crop summer corn area will grow around 6% to 8.4 million acres, going against the trend over the last decade for area to decline.

But the preference for corn won't be enough to stop the juggernaut that is Brazil's soybean crop.

Soybean planted area will grow by approximately 1.5% to 83.2 million acres, Pessoa told reporters.

Even with soybean futures slipping from recent highs and a strengthening Brazilian real, the prospects for planting beans remains positive and, with around 25% of the crop sold in Mato Grosso, farmers are already committed to increasing area.

"The route we are taking with soybeans is clear. Area will grow," said the analyst.

The outlook for corn planting is even more attractive than for soy because of the local shortages caused by aggressive early season exports and losses to this year's second crop.

As a result, Brazil will need to import 1.5 million metric tons (mmt) of corn in the 2016-17 commercial season (Feb-Jan), of which 800,000 metric tons (mt) has been already exported or is due to leave by the end of August, said Pessoa.

The export figure is actually lower than previously forecast due to local consumers buying out export contracts.

The overwhelming majority of these imports will come from Argentina and Paraguay. The Brazilian government is looking to temporarily lift restrictions on U.S. imports containing unapproved. However, South American corn will be cheaper in most cases and fulfill most of Brazil's requirements.

Brazil's corn shortage will carry on well into next year, Pessoa said, with the summer crop not sufficient to satiate Brazil's massive demand.

Local consumers are going to have to compete much more aggressively with exporters for corn so that this year's situation is not repeated, including offering forward contracts to farmers like the exporting trading companies do.

Strong prices will likely prompt farmers to seek to sharply increase second-crop corn area from January, analysts agree.

But a limitation may be seed availability, warned Daniel Latorraca, analyst at the Mato Grosso Agricultural Economics Institute (IMEA).

"The seed-producing regions had less than perfect conditions this year. That may impede a major expansion, he said.

Still, area will likely grow substantially.

Pessoa forecasts second-crop corn area will rise 8.3% to 28.9 million acres.

(ES)

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