Below normal rainfall forecast amid fears of corn yield decline

New Delhi — The rainfall forecast for Brazil in April-June indicates the country's key corn-producing regions may see below-normal rains, amid rising fears of a decline in the crop yield.

Almost a quarter of Brazil's second corn crop area was planted outside the ideal planting window this season, exposing the crops to weather-related risks.

The quarterly forecast for the Midwest region indicates that rainfall is likely to be close to or slightly below average over most of the region, with the exception of the central and northeastern part of Mato Grosso and east of Mato Grosso do Sul, Brazil's National Institute of Meteorology (INMET) said.

A water deficit up to 60 mm is expected in April in the south of Mato Grosso, northwest and southeast of Mato Grosso do Sul, INMET said.

In May and June, a water deficit is likely in most parts of the Midwest region, except for the southwest of Mato Grosso do Sul, the forecast said.

The rainfall forecast for practically the entire southern region of Brazil is below normal, except in the southeast of Rio Grande do Sul, the report said.

Pockets of dry and hot weather observed at the end of March in the states of Parana, Mato Grosso do Sul and Sao Paulo persisted in the first week of April. Producers are already speaking about the possibility of yield losses, Brazil-based consultancy AgRural said.

Although crop conditions are less complicated in Mato Grosso, Goias and Minas Gerais, apprehension among producers about the corn yield is great throughout the Centre-South region of Brazil, AgRural said in the report.

Record prices

Corn prices in the major producing states of Brazil continue to hit fresh highs due to supply shortages and concerns about crop yields.

"National corn prices reached new record levels in the week evaluated (April 5-9). Cereal supply is expected to remain low until July when some second crop production is expected [to hit the market]," national agricultural agency Companhia Nacional de Abastecimento (Conab) said in its weekly crop progress report.

Concerned about the possible impact of the weather on the second harvest, producers are limiting sales and buyers are struggling to replenish stocks, Brazil-based Centro de Estudos Avançados em Economia Aplicada (CEPEA) said in a note.

Over April 5-9, the average price producers in Lucas do Rio Verde, Mato Grosso, received for a 60 kg bag of corn was Real 72.96, up 2.1% from the previous week and 81.76% higher year on year, Conab data showed.

In Londrina, Parana, producers received an average of Real 86.80/60kg for corn over April 5-9, up 3.5% from the previous week and 104.2% higher than around the same time the previous season, Conab data showed.