Brazil cuts corn crop forecast, slashes soy hopes

by Agrimoney.com

Brazil revealed the first estimates of damage to its crop prospects from hot and dry weather, cutting forecast for corn and soybean production, but the downgrades failed to prevent a tumble in Chicago futures.

The Conab crop bureau cut by 280,000 tonnes to 75.2m tonnes its forecast for the domestic corn harvest this year.

And it slashed by 4.6m tonnes to 85.4m tonnes its forecast for the country's soybean harvest, ditching hopes of overtaking the US as the world's top producer of the oilseed.

The downgrades were blamed on the dry weather in southern and eastern Brazil which has fuelled a rally in prices in particular of coffee and sugar, for which Conab has yet to release updated estimates for domestic production.

In fact, Wednesday's revisions, while for soybeans putting Conab amongst the most pessimistic forecasters, failed to support Chicago prices of the oilseed, which tumbled 2.4% to $13.78 3/4 a bushel for May delivery in morning deals on talk of Chinese cancellations of import orders.

'Scarcity of rains'

Conab cut forecasts for soybean crops in all five regions of the country.

But the downgrade was particularly severe in the south, where in Parana, the country's second biggest soy producing state, "practically since the time of planting , the crop was severely affected by the lack of rainfall and high temperatures," the bureau said.

In Rio Grande do Sul, Conab warned that "pest attacks" had been "intensified in recent weeks by the scarcity of rains".

Further north, the crop in Goiás "was strongly influenced by climate, with low rainfall, associated with pest and disease attacks".

However, excess rains had proven a problem in Mato Grosso do Sul, slowing harvesting, Conab said.

Main vs safrinha

For corn, Conab raised the estimate for the second, or safrinha, crop, which is sown after the soybean harvest, by more than 900,000 tonnes to 43.8m tonnes, citing a boost from a recovery in prices.

However, the upgrade was more than offset by a 1.2m tonnes cut, to 31.4m tonnes, in the estimate for output from the so-called main crop because of the dry weather.

"Many crops were penalised by the scarcity of rainfall occurring in December, January and February," Conab said, terming this a "crucial" period for crop development in bringing pollination and early grain growth.

While, in its commentary, Conab failed to highlight any losses to coffee and sugar, it did cut its forecast for soybean production in Sao Paulo, the top cane growing state, by 9%, citing "climatic adversities".

The estimate for soybean production in Minas Gerais, the top coffee growing state, was slashed by 12% to 3.31m tonnes.

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