Apr 12, 2018

Corn Prices in Mato Grosso do Sul could decline with Harvest

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazilian farmers have been enjoying relatively high corn prices in recent weeks, but that may come to an end when they start to harvest their safrinha corn crop. Market analysts in the state of Mato Grosso do Sul think corn prices may retreat as much as 20% by the time harvest begins in July.

Corn prices in Mato Grosso do Sul are in the range of R$ 32.00 per sack (approximately $4.40 per bushel). On April 4th, the price of corn in the state was 49% more than a year earlier when a sack of corn was selling for R$ 21.00 (approximately $2.90 per bushel).

There is also an 8-10% premium in the local domestic market due to high demand by industry and farmer slow selling of existing stocks. Farmers have started to sell more of their corn with the higher prices, but it still is not enough to satisfy the local demand.

Farmers in Mato Grosso do Sul have sold 16% of their anticipated corn production compared to 10% a year ago at this time. The soybean acreage is estimated at 1.7 million hectares and the production is estimated at 9.0 million tons.

In an attempt to ease the shortage, the Brazilian government will sell some its corn stocks to push down corn prices. In addition to government action, the harvest will begin soon as well and these two developments could close the window of selling opportunity

Local grain traders feel prices could retreat 21% to an average of R$ 25 (approximately $3.45 per bushel) in June-July-August.