There is considerable uncertainty about how much corn is going in the ground in South America.
One of the world’s largest seed companies thinks the region’s corn acreage is going to be much smaller than the U.S. Department of Agriculture and some analysts are anticipating.
“In Latin America, the corn acres were softer in (quarter) one than we originally anticipated with Argentina down an estimated 20 percent compared to last year and Brazil down 10 percent in the summer season,” Monsanto president Brett Begemann said in a Jan. 7 conference call discussing the company’s first quarter results.
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Those reductions are much larger than the USDA’s forecast of a 12 percent acreage cut in Argentina and a 4.5 percent decline in Brazil, although the USDA’s Brazil number is for the country’s summer and winter corn crops while Monsanto’s estimate is only for summer.
If Monsanto is correct, it could provide a bullish boost for corn and other grain prices.
Brazil is expected to be the world’s second largest corn exporter in 2014-15 behind the United States. Argentina holds down the fourth spot, so both South American countries are major players when it comes to setting global corn prices.
Analysts anticipated much smaller declines in seeded acreage.
For example, Alastair Stewart, DTN’s South American correspondent, saw a five to 10 percent contraction in Brazil’s corn acres and a two percent reduction in Argentina’s at DTN’s annual Ag Summit last month.
There is support for Monsanto’s outlook. With three-quarters of the crop in the ground, the Buenos Aires Grains Exchange expects Argentina’s plantings will fall 21 percent to 7.4 million acres in 2014-15, which is well below the official government estimate of 13.7 million acres.
However, there are also detractors.
Conab, which is the Brazilian equivalent of Agriculture Canada, is forecasting 79 million tonnes of Brazilian corn production, which would be the same size as last year’s crop. The U.S. Department of Agriculture expects 75 million tonnes in Brazil and 22 million in Argentina.
Arlan Suderman, senior market analyst with Water Street Advisory, doesn’t dispute Monsanto’s Argentina acre number. Acreage is down substantially because of persistent wetness in the state of Buenos Aires at seeding and rampant inflation, which has tempered farmer interest in a high input crop such as corn.
However, he questions the estimate of a 10 percent drop in Brazil’s corn acres. His sources on the ground are forecasting a three to five percent decline, though the number could easily blossom if there is a wet February.
Delayed soybean planting will shrink the seeding window for Brazil’s second crop of corn, which is planted after soybeans are harvested.
The second crop is the big crop, accounting for two-thirds of the country’s annual corn production.
sean.pratt@producer.com
