Mar 25

Crop Forecast: Corn Brazil - 2024 03 25

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"Update on hEDGEpoint's numbers for Brazilian corn crop"

Brazil Corn - Crop Estimates Update

Right to the point

As soybeans get harvested in Brazil, the fierce debate over production numbers begins to cool down, but a new one starts to heat up – corn’s.
As always, we like to start by giving a number, this month’s is 119.1M ton (versus 121.5M ton in February). This is the total corn production we estimate for Brazil in 23/24. Now to the explanations.

The first key factor that must be considered is that Brazil is finishing the winter corn planting, which makes up most of the country’s production. As such, there’s still debate about acreage. Conab’s figures point to a stark reduction in the planted area due to poorer margins and loss of planting window – the agency projects the crop at 113.7M ton, similar to 21/22.

Although the poor-margins scenario held, the loss of the planting window didn’t. As such, we still believe that the reduction in acreage might be smaller than initially expected.

Brazil Corn - Area, Yield and Production (M ha, ton/ha, M ton)

Source: Conab, hEDGEpoint

Corn Brazil – Area Breakdown (M ha)

Source: Conab, hEDGEpoint

Phenology

The initial concerns about delays in the winter corn crop derived from the delay in the second half of the soybean planting window. To recap, winter corn in Brazil is a time-sensitive crop because the winter in Brazil coincides with the drier months. As such there are both the risk of less rainfall, as well as frosts in the states to the South.

As mentioned before, the initial concerns did not materialize. First, because one of the states that experienced late soybean planting was Rio Grande do Sul – which does not have a winter corn crop. Second, because, according to sources , the short and dry summer in Brazil reportedly shortened the soybean cycle.

In terms of development, the country has reached upwards of 90% of the intended area planted, so it is in the early stages of development.

Brazil Winter Corn – Planting (%)

Source: Safras

Winter Corn Brazil - Phenology in Mar-17

Source: Conab, hEDGEpoint 

Weather

Current climatic conditions are mixed. On the one hand, soil moisture has been depleted by the aforementioned hot and dry summer. Long-term weather forecasts are also not looking good. NOAA’s CFS model, which projects 3-month periods, shows below-normal precipitation and above-average temperatures for the April-June window.

Rootzone Soil Moisture – 18-Mar (percentile)

Source: NASA, hEDGEpoint

Precipitation Anomaly – Apr to Jun (mm/d from normal)

Source: NOAA, hEDGEpoint

Temperature Anomaly – Apr to Jun (°C from normal)

Source: NOAA, hEDGEpoint

On the other, short-term weather forecasts are pointing to a good combination – higher precipitation and cooler temperatures. Either way, weather forecasts can be as volatile as prices, so we must take them with a grain of salt. Especially this early in the crop.

As the crop is only beginning NDVI at this point might not tell us too much, and looking at it as a predictor this early can be misleading. Still, in most regions, it is close to average, and we have to watch how it will evolve in the face of this mixed-weather scenario. For now, we forecast a conservatively good nationwide yield (5.53 ton/ha) – in 22/23 the yield was 5.92 ton/ha.

Precipitation Anomaly – Next 14 days (in/d from normal)

Source: NOAA, hEDGEpoint

Temperature Anomaly – Next 14 days (°F from normal)

Source: NOAA, hEDGEpoint

In Summary

In our opinion, corn production in Brazil is certainly going to be smaller than last year’s, we forecast a crop of 119.1M ton, versus almost 132M ton last cycle. However, the extent of the drop is under debate, with a wide range of estimates out there. We currently hold that the cut in acreage might not be as big as once thought, and that weather looks too mixed to be certain of both too-good and too-bad results.

Weekly Report — Coffee

Written by Pedro Schicchi
pedro.schicchi@hedgepointglobal.com
Reviewed by Alef Dias
alef.dias@hedgepointglobal.com
www.hedgepointglobal.com

Disclaimer

This document has been prepared by hEDGEpoint Global Markets LLC and its affiliates ("HPGM") exclusively for informational and instructional purposes, without the purpose of creating obligations or commitments with third parties, and is not intended to promote an offer, or solicitation of an offer, to sell or buy any securities or investment products. HPGM and its associates expressly disclaim any use of the information contained herein that may result in direct or indirect damage of any kind. If you have any questions that are not resolved in the first instance of contact with the client (client.services@hedgepointglobal.com), please contact our internal ombudsman channel (ouvidoria@hedgepointglobal.com) or 0800-878-8408 (for clients in Brazil only).

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