Jun 19, 2017

Farmers in Mato Grosso worried about Corn Prices and Storage

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

Farmers in Mato Grosso are in the early stages of harvesting their safrinha corn and they are concerned about two things - where they are going to store the corn and the price of corn. The Mato Grosso Institute of Agricultural Economics (Imea) estimated that the safrinha corn in the state was approximately 6% harvested as of last Monday.

In the municipality of Tangara da Serra, which is located in western Mato Grosso, farmers are expecting to harvest more than 100 sacks per hectare (92.4 bu/ac), whereas last year, they harvested less than 90 sacks per hectare (83.1 bu/ac). They are anticipating having a problem finding a place to store all the corn because many grain silos are still full of soybeans from the last harvest. As a result, many have purchased silo bags to store their corn. If the corn is dry and free of insects when it is put in the silo bags, the condition of the corn in the bags can remain good for up to 18 months.

According to Imea, farmers in the state have sold approximately 60% of their anticipated 2016/17 corn production. In Tangara da Serra, the local corn price has been holding steady in recent days. The price of corn is in the range of R$ 16.00 per sack (approximately $2.20 per bushel), whereas the minimum price set by the government is R$ 16.50 per sack (approximately $2.27 per bushel). In order to receive the minimum price, farmers must participate in the auctions conducted by Conab.

There have been a series of three auctions thus far and the government's efforts to stabilize corn prices in the state seems to have been successful. Prior to the start of the auctions, the local corn price was lower than the current price, so the auctions have kept the prices from falling even further. Even though the price has stabilized, unfortunately it is still below the minimum set by the government and below the cost of production.

The reason why the silos are still full of soybeans is due to the fact that farmers have also been slow sellers of their 2016/17 soybean production. Imea estimates that farmers have sold 60% of their soybeans and the current price of soybeans in Tangara da Serra is approximately R$ 56.00 per sack (approximately $7.75 per bushel).

According to the director of the local Rural Syndicate in Tangara da Serra, Clovis Felix de Paula, R$ 56.00 per sack is below the cost of production. He feels that if soybeans yielded 55 sacks per hectare (47.8 bu/ac), the price needs to be at least R$ 65.00 per sack (approximately $9.00 per bushel) in order to cover the production costs.