FAS Brazil Cuts Corn Production Forecast

The USDA-Foreign Agriculture Service in Brazil revised down its 2021/22 forecast corn harvest to 113 million tonnes, compared with the USDA’s official estimate of $115 million, because of disappointing first-crop corn volumes, the agency said in a Grain and Feed Update report.

Consequently, the corn export forecast also was lowered to 42 million tonnes from 43 million, the report said.  Imports were expected to remain above average at 2.5 million tonnes, though they will continue to be sourced mostly from the Mercosur trade bloc.

The FAS post forecast Brazil wheat production at 7.7 million tonnes, down from the USDA estimate of 7.8 million, for the 2021/22 season, an increase of more than 1.45 million from the 2020/21 season, thanks to forecast expansion in planted area, the report said.

Wheat imports were projected to rebound to 7.0 million tonnes from the USDA’s official 6.5 million and last year’s 6.395 million after the low volumes registered over the last two seasons, the FAS said.

Brazil’s wheat exports were forecast to remain high at 1.600 million tonnes, compared with the official USDA estimate of 1.300 million and last year’s 925,000, thanks to a diverse buyer base, the report said.

 

CORN PRODUCTION

 

The FAS post slightly revised up its forecast for corn planted area for marketing year 2021/22 (March–February) to 21 million hectares, which represents an expansion of 5.5%.  The revision accounts for the disappointing first-crop corn harvest, which will amplify already high corn prices and incentivize producers to plant a larger area for second-crop, or safrinha harvest.

Press reports indicated that as of third week of January, farmers in the southern states of Santa Catarina and Rio Grande do Sul, two states that saw production significantly affected by the lack of rain, saw farmgate corn prices pass the 100 real-per-60-kilogram sack mark, the report said.

The corn index from the Center for Advanced Studies in Applied Economics registered the upward trend beginning in December as reports of substantial production losses began to pile up, the FAS said.  The market expected that high corn prices would persist in Brazil through at least mid-2022, when the safrinha corn harvest was expected to hit the market.

But despite the increased planted area, the FAS production forecast was lowered because of lower yields in the first crop, the report said.  However, since corn is grown in three different periods in various parts of the country nearly year-round, yields and production estimates were difficult to make.

In the latest estimates, the FAS considered drought-reduced yields along with investments in technology and average weather patterns in coming months.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $139.02 to $140.84 per cwt, compared with last week’s range of $136.90 to $138.57.  FOB dressed steers and heifers went for $219.22 to $220.45 per cwt, versus $214.07 to $217.14.

The USDA choice cutout Tuesday was down $1.50 per cwt at $277.46, while select was off $1.20 at $273.84.  The choice/select spread narrowed to $3.62 from $3.92 with 139 loads of fabricated product and 41 loads of trimmings and grinds sold into the spot market.

The USDA reported that basis bids for corn from feeders in the Southern Plains were steady at $1.40 to $1.50 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.20 over Mar, which settled at $6.32 1/4 a bushel, down $0.03.

Ten steer contracts were tendered for delivery against Feb Tuesday.

The CME Feeder Cattle Index for the seven days ended Monday was $161.43 per cwt up $1.29.  This compares with Tuesday’s Mar contract settlement of $166.87 per cwt, up $1.85.