Argentina and Brazil: Too Early to Tell

South AmericaWith weekly USDA data – and the monthly supply and demand report – unavailable due to the government shutdown, markets are left to trade on private harvest yield estimates and anecdotal reports from the field.

In Argentina, early corn planting got under way in August and runs through this month. Late corn, about 30 percent of the crop, is planted in November up to early January. The U.S. Grains Council's consultant in the region reported that some planting delays in the early corn will shift acres to the later crop, and that conditions have been cool and dry. In some instances acres may shift from corn to soybeans because of the dry weather.

As for pricing, economics favor soybeans, as CBOT corn prices have fallen and it costs more than twice as much to plant corn in the region than as it does soybeans. This may also shift some acres, especially should weather concerns remain in place. Still, the last USDA report (September), projected Argentine corn production at 26 million tons (1 billion bushels), nearly even with last year. According to the consultant, that production estimate remains feasible with trend yields but it is still too early to tell.

Lower corn prices and a large carryover of corn negatively influenced planting decisions for corn in Brazil, with farmers choosing not to plant as much of a summer corn crop. An anticipated record soybean crop also played a part in the decision because of significant infrastructure problems in managing the crop. The outlook for soybean exports next year – with China being a key buyer – combined with the reduction in value of the Brazilian Real has farmers optimistic on soybeans.

USDA in September estimated 72 million tons (2.8 billion bushels) of corn production in Brazil this year, down from 81 million tons (3.2 billion bushels) last year, is low by 2-3 million tons (78.7-118.1 bushels), according to the Council's consultant, who also acknowledged it may be a bit early for a sound estimate.

 

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