Brazil Declares First Drought Alert in a Century: Weighs on Crop Production

Brazil's corn production outlook continues to ebb due to ongoing drought that the government has now declared to be the worst in nearly a century. Gro’s Brazil Corn Yield Forecast Model is pointing to sharply lower year-over-year corn production despite an increase in planted area. 

Gro expects the USDA’s June WASDE report on Thursday will reduce its forecast for Brazilian corn production. In the May WASDE, the USDA estimated Brazilian corn output of 102 million tonnes, down 7 million tonnes from the April forecast. Gro’s Brazil Corn Yield Forecast Model has projected production well below official forecasts since January as the drought presented significant risk and now unrecoverable damage. 

Gro also expects the USDA will once again raise its estimate for US corn demand. Corn used for 2020/21 US ethanol production has accelerated, and last week reached the highest level in more than a year. In addition, as crop estimates for Brazil have fallen, China has accelerated purchases of US new crop corn, pushing new crop US corn sales to a record high. 

Brazil's agriculture minister declared the first emergency drought alert in 91 years as chances for rain fade for key corn areas. May is the typical start of Brazil’s dry season and with below-normal precipitation volume in the past few months, drought conditions, as shown in the Gro Drought Index (GDI), show no signs of abating. 

Most of Brazil’s corn crop is grown in the central Brazilian states of Mato Grosso, Paraná, Mato Grosso do Sul, and Goiás, as seen via Gro's Crop Cover feature. Since the end of March, the yield estimate for Mato Grosso has dropped nearly 10%, according to Gro’s Brazil Corn Yield Forecast Model. 

Brazil’s current safrinha, or second, corn crop accounts for 76% of the country’s total corn production and bridges the gap in global exports ahead of the US harvest in September. Expected production declines out of Brazil place great pressure on the US crop to achieve above-trend corn yields. You can follow Gro’s in-season US Corn Yield Forecast Model for up-to-date readings on US corn supply. 

This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.