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Dry weather in Brazil likely to turn farmers cautious on planting second corn crop: sources

New Delhi — The prevailing dry weather conditions in Brazil are likely to make farmers more cautious about planting second crops, especially corn, market sources said.

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Brazil is the world's second-largest corn exporter after the US and most of the corn exported from the country are the second crop, also known as safrinha.

In Brazil, the safrinha crop is planted following the soybean harvest. Soybean planting starts in September, and by March harvesting will be in full swing.

Last year, rains in most parts of Brazil arrived earlier than usual, which led to early planting and harvesting of the oilseed. This allowed farmers to plant corn within the ideal planting window, which is by February 20 in Mato Grosso and March 10 in Parana.

As a result, Brazilian corn production in 2018-19 is estimated at a record 99.98 million mt, up from 80.71 million mt a year earlier, according to national agricultural agency Companhia Nacional de Abastecimento, also known as Conab.

"The forecast is for at least another three weeks of dry, and even then, the rainfall is expected to be light. The long-range forecast shows good rains only for November.This is very shocking. Normally, even with a late start, the rains always come in October," Brazil-based agriculture consultant Kory Melby said.

Increased probability of below-average precipitation is forecast for all four forecast seasons (October-December through January-March) for a major part of "northern and/or northeastern South America," the International Research Institute for Climate and Society said in its outlook.

RETHINKING PLANTING DECISIONS

A delay in the arrival of rains in Brazil this year could force farmers to rethink their planting strategies, analysts said.

Soybean planting is allowed in mid-September in Mato Grosso and Parana. The first areas planted are usually where farmers need to plant soybean in this period to allow the planting of the second cotton crop, which is their main crop in terms of income, Rabobank's senior grains and oilseeds analyst Victor Ikeda said.

If soybean planting does not start well into October, then it is possible farmers will focus on cotton and hold back on the soybean area and plant cotton as a single crop in December and early January, Melby said.

"This would then cut back on the planted soybean area and 2nd crop corn by default," Melby said.

Past data from Conab indicates that farmers generally tend to reduce investments in the second corn crop if it is planted in less than ideal conditions.

"Some farmers might stick with a long soybean season of 120 days and better yielding and then forget about a [second] crop on some fields," Melby said. "Less risk and higher return on investment."

CLOSE EYE ON WEATHER

While the current dry spell and weather forecast for Brazil have caused some alarm, a lot will depend upon the actual rains in October and November.

The key months to be analyzed in terms of weather conditions and planting developments are October and November. When most of the fields in Brazil are planted during this period, there are fewer risks in terms of rainfall volumes to crop development later.

If the pace of soybean planting in October-November is normal, Brazilian farmers will not have problems planting corn as a second crop at the beginning of next year, Rabobank's Ikeda said.

Moreover, in the event of favorable rains by October, farmers can use shorter maturing soybeans to compensate for the lack of time and get corn in the ground in a timely manner, Melby said.

"It always scares us when we look at these charts with no precip [precipitation] bars until the end of October, but it's usual to see at this time of the year weather models forecasting close to no rains until at least mid- October, when Mato Grosso rain reason really starts...so I think it's more reasonable to wait," said a producer in Mato Grosso.

Even if soybeans are planted as late as November 1, with an average of 110 days soybeans maturity, the average harvest date would be February 19, which would give enough room to second corn crop to be planted on time, the producer said.

As for soybean and cotton growers, we can say it starts to worry. Their time window is narrower. For highest yields they need to plant soybeans and harvest until the first week of January, when they plant cotton, the producer said.

Unlike last year, the outlook on second corn production in Brazil looks less clear so far.

"For corn, I am expecting acreage to reach 18.6 million hectares (summer + safrinha). It means almost 1 million hectares of growth," Ikeda said.

The US Department of Agriculture in its September forecast projects Brazilian corn production for 2019-20 at 101 million mt.

--Mugunthan Kesavan, mugunthan.kesavan@spglobal.com

--Edited by Jonathan Fox, newsdesk@spglobal.com