Brazil has been steadily planting more corn in recent years, and production may be on the verge of explosive growth as farmers double and even triple crop to take advantage of high prices, Chinese demand and a rising domestic ethanol sector.
Brazil, which has long been a soybean powerhouse, may not be yet in striking distance of surpassing the U.S. in corn production and exports, but the emerging rivalry is something that’s getting increasing attention from American producers.
“Brazil has incredible ag production capacity,” said Collin Watters, director of exports and logistics for the Illinois Corn Marketing Board and the Illinois Corn Growers Association. “We’ll need to be paying attention to it. It’s something that’s certainly on our radar.”
Brazil is still in the final stage of planting the first of its three corn crops this calendar year and won’t begin planting its largest corn crop for the 2022-23 marketing year — the second crop, or “safrinha” — until January. The highest estimate by Brazil’s National Supply Co., which goes by the Portuguese acronym of CONAB, for all planting for 2022-23 is 55 million acres. That’s a 4% increase from 2021, and total production is expected to reach about 5 billion bushels — a 10% increase.
The increase is even more impressive when put in context. Brazilian farmers produced about 3.2 billion bushels of corn a decade ago for the 2013-14 marketing year, meaning the country increased production by 63% over the past 10 years.
That’s a steep increase, and it’s only going to continue, according to Gary Schnitkey, a professor and agricultural economist at the University of Illinois, and Joana Colussi, a visiting researcher at the university.
New farmland is constantly coming into production, both by converting pastureland and the expansion of farms in Brazil’s North and Northeast — known commonly as the Matopiba region.
But the fastest increase in corn acres is on farms that already exist in the country’s midwest. That’s the region where Brazil’s safrinha is grown. It is planted from January through April after farmers harvest their soybeans. Whereas the safrinha was once just a fraction of the much larger first crop, it now makes up more than 70% of Brazil’s corn production, according to Colussi.
The success of the safrinha has increased along with Brazil’s soy production, and there’s still plenty of room for growth as market conditions push more and more soybean farmers to double crop, said Colussi.
“The growth in the safrinha crop is an opportunity for Brazil to double its corn production in the coming years,” she said in a webinar. “More than half of the corn production is in the Midwest.”
To get an idea of the potential for corn expansion in the Midwest, one only has to look at Mato Grosso, the largest Brazilian ag state. Farmers there planted about 29 million acres of soybeans last year, according to the Mato Grosso Institute of Agricultural Economics, but about 18 million of those acres got a second corn crop. That’s roughly 11 million acres of potential double cropping to produce corn on top of soybeans in one state.
“We’ve seen Brazil’s growth in grain production, and there really is no reason not to expect that to continue to grow into the future at roughly the same pace,” Schnitkey said.
About 66 million acres of production this year came from double and triple cropping, but farmers also could expand into pastureland. Of the 30% of land in Brazil used for agriculture, about 21% is rangeland and 9% is used for crops. That pastureland is already being converted to soybeans and corn and Schnitkey said it won’t stop anytime soon.
“That number gives you a feel for expansion possibilities if you’re looking at grain production,” he said.
And more corn means more exports.
CONAB estimates Brazil will export 46 million metric tons of corn for the 2022-23 marketing year. While that’s still well below the USDA forecast for U.S. corn exports (58 million tons), Brazil’s numbers are gaining fast, propelled by high corn prices and weak domestic currency (the Brazilian real is about 5.2-to-1 with the U.S. dollar).
“Right now the U.S. dollar is incredibly strong,” Watters said, “and that’s making U.S. exports just not that competitive, but that ebbs and flows.”
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As of now, there is plenty of room on the world market for more corn and the space for Brazil to expand its global sales without impacting U.S. exports, but that may not be the case for much longer as Brazil shows no sign of halting its growth and the country cements new access to the largest importing country in the world — China.
That new CONAB forecast for Brazilian corn exports is a 24% increase from 2021-22 and it will likely include shipments for the first time to China.
“There is an expectation that exports will grow even more due to the agreement signed by China and Brazil last May,” Colussi said. “The two countries have agreed on a protocol … China is taking steps to accelerate imports of Brazilian corn, therefore shipments from Brazil may still happen this year.”
While the protocol was signed, Brazil’s corn exports to China won’t likely ramp up significantly in the very near term, said Glauber Silveira da Silva, executive director of the Brazilian Corn Producers Association, which goes by Abramilho.
“Exporters are registering with the Ministry of Agriculture and undergoing inspections,” he told Agri-Pulse. “After that, a list of interested parties will be sent for the Chinese authorities to validate, and only then will exports begin.”
Not all of Brazil’s increased corn production is going to exports, said Colussi. Some is going to the rising corn-based ethanol sector in the country.
“Brazil is expanding its ethanol production,” she said. “Currently 17 corn ethanol plants are operating in the country, 15 of which are in the Midwest,” Colussi said.
Brazil, historically known for sugarcane ethanol, is expected to produce 4.5 billion liters (about 1.18 billion gallons) of corn-based ethanol this year, a 30% increase from last year, said Abramilho’s da Silva.
But he also said the expansion is slowing. Brazilian ethanol companies “have retreated in their projects due to instability in public policies,” he said. “Two new power plant projects are on hold. Ethanol is currently experiencing major concerns due to the lack of biomass, consistent public policy and high corn prices. These factors should slow down the expected growth if this does not change quickly.”
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