Nov 21, 2019
Strong Corn Prices in Mato Grosso, Brazil's Largest Corn Producer
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The state of Mato Grosso is Brazil's largest corn producing state and virtually all of the corn will be planted as a second crop following soybeans. The safrinha corn in the state will be planted generally during January and February.
Farmers in Mato Grosso are always worried about their safrinha corn production due to the unpredictable nature of the weather at the end of the growing season when the corn is filling grain, but one thing they are already pleased about is the current corn prices in the state.
According to the Mato Grosso Institute of Agricultural Economics (Imea), corn prices in Mato Grosso increased 4% last week to an average of R$ 28.67 per sack (approximately $3.25 per bushel). The breakeven price for corn production in Mato Grosso is in the range of approximately $2.00 to $2.25 per bushel, depending on the corn yield.
The improved corn prices are being attributed to a number of factors including: strong domestic demand from ethanol producers and livestock producers, strong export demand, tight carryover supplies, slow farmer selling, and a weaker Brazilian currency.
All across the state, numerous corn-based ethanol facilities are either in production or will start production in the near future resulting in increased domestic demand for corn. Livestock producers are also willing to pay more for their needed corn supplies due to record high cattle prices and strong demand for animal protein primarily from China.
The weaker Brazilian currency is also contributing to the improved corn price. The Brazilian real is currently trading at 4.2 to the U.S. dollar, which is near a record high for the currency. Any time the Brazilian currency devaluates compared to the U.S. dollar, it generally results in higher domestic grain prices in Brazil.