Brazil downgrades crop outlook from prior record

Brazil downgraded its outlook for the 2020-21 combined grains and oilseed harvest, which previously had been expected to break records.

The 2020-21 harvest is on track to reach nearly 254mn metric tonnes (t), down by 2.6pc from the 260.8mn estimated last month by the national supply company Conab. The number is also below last season's record production of 257mn t.

The highest forecast for this cycle was released in April, when Conab forecast Brazil's production would reach 273.8mn t.

The decrease is a consequence of a prolonged drought in the main producing areas, combined with low temperatures and frosts in the center-south region. These factors caused losses in the annual second crops, especially in corn, despite a 7pc increase in planted corn acreage over the previous season.

Conab lowered the corn outlook for a fourth month in a row. The whole corn harvest is now expected to reach 86.6mn t, down by 7.2pc from the estimate last month. The new estimate would also represent a decrease of 15.5pc over the 102.6mn t produced in the 2019-20 corn crop.

Conab now estimates the winter corn crop at 60.3mn t, down from 66.9mn previously predicted, citing a 6.3pc decrease in expected productivity. The outlook for the second crop is 19.6pc lower than the 75mn t harvested a year ago.

On the other hand, soybean production is expected to reach a record level this season. The harvest is almost finished, with Roraima and Alagoas states the only laggards. The agency forecasts soybean output at 135.9mn t, up by 8.9pc over the last season and flat over the prior month's estimate. Productivity increased by 4.5pc over the previous season and acreage was up by 4.3pc at 38.5mn hectares (95mn acres).

Winter crop planting has finished, according to Conab. Among them, wheat acreage increased by 15pc over last season to nearly 2.7mn ha. Production is expected to reach 8.6mn t, a record high and up by almost 38pc over last year.

Supply and demand

The outlook for domestic corn consumption was reduced to 70.9mn t from 71.3mn t, but it still marks an increase of 3.3pc over the previous season. The new outlook reflects reduced availability of corn. Even so, Conab noted it would represent an historically high volume of domestic consumption, because of high demand for animal feed. The outlook for exports decreased to 23.5mn t from 29.5mn t. Final stocks for the 2020-21 crop are expected to reach 5.1mn t, down by 52pc from the 2019-20 corn crop, largely because of reduced output.

Brazil's domestic consumption of soybean is estimated at 50mn t, flat over the previous outlook. Exports are expected to reach 83.4mn t, down from the 86.7mn t estimated last month, but Conab highlights the export estimate may be lowered again in the next five months. According to Conab, January-July soy exports reached 66.2mn t, around 2.5mn t lower than a year earlier. Final stocks for the 2020-21 crop are expected to reach 7.6mn t.

By Renata Cardarelli