Conab releases 1st estimate of the 2015/16 growing season in Brazil

Soybeans - For the 2015/16 Brazilian soybean crop, Conab is estimating that the acreage will increase 1.7% to 3.8% to 32.6 to 33.2 million hectares (last year's acreage was 32.0 million hectares). The total production is expected to be 100.0 to 101.9 million tons or 3.8 to 5.7 million tons more than last year's production of 96.2 million tons (+4.0% to +5.9%). The nationwide soybean yield is expected to be 3,066 kg/ha (44.4 bu/ac), which is +2.2% compared to last year.

This is a very aggressive estimate from Conab, which usually takes a conservative approach in their initial estimates of the crops. In their commentary they cited a better return on investment for soybeans, lower cost of production, tight credit, and the ability to plant a second crop following soybeans. The increase in acreage is coming from the switch from full-season corn to soybeans, the conversion of degraded pastures to row crops, and the clearing of new land.

The increase in soybean acreage is universal across Brazil. Here is a list of the states in Brazil and the increase in soybean acreage this season (the states are listed from south to north): Rio Grande do Sul +2%, Santa Catarina +4%, Parana +3%, Sao Paulo +5.5%, Mato Grosso so Sul +2%, Mato Grosso +2%, Goias +1.5%, Bahia +13%, Piaui +4.5%, Maranhao +1%, and Tocantins +2%.

Corn - As expected, Conab confirmed that Brazilian farmers continue to reduce their full-season corn acreage in favor of more soybean production. They estimated that the full-season corn acreage will be 5.8 to 5.9 million hectares or -4.2% to -6.7% less compared to last year's 6.2 million hectares. This reduction in full-season corn acreage is about in line with other estimates as well. Conab is estimating that the full-season corn production will be 27.9 to 28.9 million tons or -8.9% to -5.8% compared to last year's production of 30.7 million tons.

For the safrinha corn crop, Conab just carried forward the estimates from last year's safrinha corn production. They will continue doing this until next February when they will publish their first assessment of the 2015/16 safrinha corn crop. They did lower the estimated safrinha corn yield by 0.2% to 5,698 kg/ha (87.7 bu/ac) compared to last year and the safrinha corn production is estimated at 54.6 million tons or 0.2% less than last year's production of 54.7 million tons.

Brazil's total corn production is estimated at 82.6 to 83.5 million tons or -3.3% to -2.2% compared to the 85.4 million tons produced last year. Most analysts expect the 2015/16 safrinha corn acreage to be up due to relatively good corn prices, but that is not a sure thing. The Brazilian currency has surprisingly strengthened over the last two weeks, which is not good news for Brazilian corn farmers. Additionally, Brazilian meteorologists are forecasting dryer than normal conditions during the period when farmers would be planting their safrinha corn. Therefore, we will take a wait and see attitude concerning the safrinha corn acreage.