BRAZIL CORN WATCH: Concern over crop yields amid widespread dryness

The lack of rainfall in some of the key corn-producing states of Brazil continues to be a cause of concern to producers amid dry weather and a mixed weather forecast for April-June.

The rains over the last week led to some improvements in soil moisture in the safrinha corn area, but dryness is widespread.

In Mato Grosso, second-corn crop development has been good so far, but the decrease in rainfall raises concerns. Similarly, in Goias there is a possibility of a reduction in crop yields due to the lack of adequate water, the national agricultural agency Conab said in a report.

In Minas Gerais, the dry climate in the main producing regions may cause irreversible damage to crops sown until the beginning of March, Conab said.

"Warm and dry weather is expected across the safrinha corn belt over the next week, which will allow dryness to increase and expand in coverage, stressing safrinha corn growth. Showers may increase a bit in southern and western safrinha corn areas late in the 6-10 day period," space technology provider Maxar said in its daily weather report on April 25.

Moreover, the rainfall forecast for April-June is less than ideal for the safrinha corn crop in Brazil.

The forecast sees below-average rainfall for practically the entire southern region of Brazil as a result of the impacts of the La Nina phenomenon, according to Brazil's National Institute of Meteorology.

La Nina refers to the large-scale cooling of the ocean surface temperatures in the central and eastern equatorial Pacific Ocean, coupled with changes in the tropical atmospheric circulation, namely winds, pressure, and rainfall.

Prices ease

Corn prices in the key markets of Brazil eased over the last few days as the consumers remain optimistic about the production despite the current weather conditions.

Corn prices continue to decline due to the bumper second harvest projection and because of the low availability of storage space, which may lead to an increase in the supply of the grain in the physical market from June, Conab said.

The country is expected to harvest a record 115.6 million of corn in MY 2021-22, including the first-corn output, according to Conab.

Brazil's 2021-22 corn crop will be marketed from February 2022 to January 2023.

The first-corn crop in Brazil is planted in September-December and harvested in February-May, while the second crop is planted in February-March and harvested in June-July.

Brazil is usually the second-largest exporter of corn following the US.

Corn buyers are hoping for a bumper harvest in the country this season amid heightened supply risk in the Black Sea region and high prices.

Meanwhile, in the export market sources reported increasing demand interest for Brazilian and Argentinian corn, but no trades were heard in FOB markets. Concerns regarding a drought weather risk in Brazil continued to support the port premiums, S&P Global Commodity Insights said in its assessment on April 26.

Corn price received by producers in Brazil (Real/60 kg bag)