Porto Alegre, June 1, 2021 – The evaluation of the Brazilian crop always builds upon the assumption that the climate tends to be normal and, therefore, productivity tends to start in the environment of a normal average. With La Nina impacting the summer crop, we had warned about potential traditional problems of this climatic event on the summer crop in the South region, in particular. The summer crop registered losses that some government agencies seem not to have been able to evaluate so far, despite all its effect on the domestic corn market. The whole summer climate ended up causing delays in the planting of the 2021 second crop. With nearly 70% of the area cultivated in March, the chances of problems in the fall were increased. However, with a regular climate in the fall, a new production record could still be set, not least because the planted area was the largest in history.
Safras & Mercado has the tradition of keeping the numbers very aligned with the real events of annual crops. In the case of corn, Brazil today has three distinct crops that deserve to be monitored within the order of events. In 2021, we started by pointing to a very tight summer crop that could fail to meet all the demand for the semester, which would bring more aggressive price movements and, perhaps, even the need for imports. Basically, domestic prices have been record-breaking in this first semester, not only in reals but also in dollars, and imports go on in line with regional needs.
Once again, the second crop would be the chance to settle down domestic prices and replenish stocks for 2022. The planting of the second crop showed a result even higher than expected with an area larger by 8.5%. Productivity projections started within the normal average. However, the situation of the soybean harvest brought us a new fact, that is, the planting of only 30% of the area in January and February and around 70% in March, in a few cases until early April for the corn’s second crop. This was the first cut suggested for the second crop, that is, potential productivity, with production falling from 84 to 80.8 million tons.
If the rainfall were regular in the fall, the second crop would still have good potential, even with late cultivation. There was a good occurrence that was registered between Paraná and southern Mato Grosso last week. However, for the vast majority of regions, rain arrived late. Unfortunately, corn crops do not pollinate and silk twice according to the occurrence of rain. Owing to the weather in April, we had cut potential production from 80.8 to 74.7 million tons.
In May, we are cutting production to 61.6 million tons. The rain can return in June with great amplitude, but production is already designed. Of course, new assessments will need to be carried out later to measure the real productivity, but it is undoubtedly the most significant production cut ever made by Safras & Mercado for a Brazilian second crop.
In this environment, some points are fundamental for evaluation:
– Mato Grosso is “saving” the national production in 2021. The center-north and west of the state are producing regularly. There are isolated situations, by the extension of area, that may have suffered a little more with irregular rainfall. However, without a doubt, such areas are much smaller;
– The east and south of Mato Grosso, however, were hard hit by rain. Productivity between Barra do Garça and Alto Taquari will be very low even with rain at the end of May. In this region, rainfall was much lower than normal in April, and larger areas may cope with losses of 100%;
– In Paraná, the picture seems to have pointed to a positive bias with the rain of this second half of May. In the far west and Paraguay, the rain undoubtedly helped a lot and will improve the corn average weight. However, that will not avoid productivity losses generated in the pollination and silking phase, remaining below the region’s average. Crops with 50 to 90 bags of productivity must be the most common in the region;
– In the center-north of the state, the situation is terrible. There was hope that crops could show some recovery and potential, but the pollination phase, concluded in the midst of a drought, shows an irreversible picture. So, the productivity for the northwest and north of Paraná from zero to 30/40 bags is still potential;
– In São Paulo, the situation is very bad and similar to the north of Paraná. The rainfall regime was practically the same, that is, very bad. Regional crops are limited to good conditions in cases of use of pivots for irrigation, as in the Mogiana region. However, in normal crops, the average potential productivity ranges from 30 to 60 bags. Rain now will not change the profile of crops;
– In Mato Grosso do Sul, the extremes show a better condition, but with productivity losses from the normal average. In the extreme south of the state, in the region of Ponta Porã, the picture is better, but with potential yields below 100 bags per hectare. The same is true in the most technically advanced area of the state, that is, Chapadão do Sul, Baús, Costa Rica and surroundings. Areas with a harvest pattern above 120 bags per hectare start to have averages of 60 to 100 bags. In the central region and much of the south, on the other hand, the situation is critical. Losses of 100% in many plantations;
– In Goiás, the southwest is the region with the best productivity of the state. Part of crops has a bad situation, with yields below 50 bags, and another part has potentials from 70 to 100 bags. The rainfall regime, planting date, soil condition, and technology define this profile. On the other hand, in the east of the state, the situation is very bad, with crops totally lost, some abandoned, and others with the chance of production between 30 and 60 bags/hectare. Definitely, a much lower-than-expected second crop across the state;
– Minas Gerais has a pattern of very late planting, most of the time in March and April. This year, a greater part of crops was planted in this period. Many crops are completely lost and with no chance of recovery even with rain. June without rain could cause additional losses. Only the north of the state, with slightly better rainfall in May, may signal some improved potential production.
So, productivity cuts occurred in a general way. Only in Mato Grosso the production bias remained even with some improvement due to the aforementioned profile. The state now supports practically half of the production of the Brazilian second crop in 2021. The second crop is now adjusted to 61.59 million tons for the entire country. In this assessment, situations generated by the frost that occurred in Paraná during the closing of May is not yet computed. If there is any negative effect on production, it will be assessed in the report at the end of June.
The North and Northeast regions show, in turn, excellent production potential. The rain in Pará, Maranhão, Piauí, and Rondônia was favorable in May and indicate a large production to be harvested from July onwards. This scenario indicates good harvests in these states from July onwards and full supply to the Northeast of the country.
Now Brazil’s corn crop has been revised to 95.2 million tons, against 104.7 million tons in April. Unfortunately, the climatic picture is irreversible in sixty days of much below normal rainfall in most second crop areas.
Agência SAFRAS Latam
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