Estimates of South American corn production for 2009-2010 are on the rise due to favorable growing weather, improved seed technology and increased fertilizer usage.

The rising crop prospects suggest U.S. corn will face stiffer export competition from South American supplies this spring and summer that USDA currently estimates.

The Buenos Aires Grain Exchange last week raised its estimate of Argentina’s 2009-2010 corn crop by 1.5 million tons to 18 million metric tons (mmt), citing high yield potential following favorable pollination conditions in December and early January.

Argentina President Cristina Fernandez on Thursday said corn production would reach 18-20 mmt compared with 12.6 mmt last year when a severe drought hit the crop.

In its weekly crop update, Argentina’s Agriculture Ministry said the corn crop is in an "excellent state" in the key growing area of Marcos Juarez in the top-producing state of Cordoba. The crop there, which saw "very beneficial" December rains, is now in the early dough stage of development, the Ministry says.

Recent hot and dry weather has cut into Argentine soil moisture and could cause some stress on the developing corn and soybean crops, but scattered rains and cooler weather are expected to move south to north across the country’s central crop belt, preventing serious crop problems.

The good condition of the Argentine crop indicates USDA will have to substantially increase its estimate of the Argentine corn crop – currently at 15 mmt – in upcoming world supply/demand reports.

As a result of larger production, Argentina’s 2009-2010 corn exports may also wind up significantly larger than USDA’s current estimate of 8 mmt.

Meanwhile, increased yields are expected to offset much of the impact of a sharp drop in Brazil’s corn acreage.

Brazil's main summer corn crop will total 32.3 mmt, down 4% from 2008-2009 on a 10.7% decrease in planted corn area, according to a forecast released in early January by CONAB, the supply division of Brazil’s Agriculture Ministry.

The crop estimate was up 1% from the previous estimate released in December.

CONAB forecast a 7.6% increase in Brazil’s average corn yield over last year, when drought hurt the crop in the top-producing state of Parana.

The state of Parana could see yields rise to a record of more than 7 tons/hectare this year.

"Productivity will grow because rains were favorable and because there has been a larger volume of genetic seed planted this season," says Odacir Klein, president of the Brazilian Association of Corn Producers recently told Reuters News Service.

Brazil's first biotech cereal seed was approved in 2007. The area planted with biotech corn is set to rise to 27% this year, up from 5% for the summer crop of the 2008-2009 season, according to data from the Brazilian Association of Seeds and Saplings.

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.