May 11, 2017

Brazilian Corn Producers Request more Help from Government

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

While the weather has generally been beneficial for the safrinha corn crop in Mato Grosso do Sul, the price of corn in the state has been very disappointing.

According to the vice president of the Rural Syndicate of the municipality of Chapadao do Sul in the state of Mato Grosso do Sul, the price for safrinha corn delivered at harvest is in the range of R$ 17 to R$ 18 per sack (approximately $2.49 to $2.63 per bushel). These are actually some of the higher corn prices in the state because a railroad passes nearby thus reducing transportation costs. In some parts of the state, corn prices have declined 11% over the past month.

The vice president of the rural syndicate wants the federal government to take a more active role in assuring that farmers in the state are able to sell their corn at the minimum price guaranteed by the government, which is R$ 16.50 per sack (approximately $2.42 per bushel).

The Brazilian government conducted three auctions last week in an effort to support corn prices in Mato Grosso. Farmers in Mato Grosso concluded 7,400 option contracts for 200,000 tons of corn at R$ 17.87 per sack (approximately $2.62 per bushel). Farmers have until September 11 to exercise the option and sell the corn to Conab.

Conab also conducted two other auctions last week for corn produced in Mato Grosso. The first was a Pepro auction of 164,100 tons of corn where farmers sell their corn to the government at the guaranteed minimum price of R$ 16.50 per sack (approximately $2.42 per bushel). The third was a PEP auction of 192,000 tons designed to aid corn buyers in regions of Brazil where there is a corn deficit.

On May 11th, another 500,000 tons of corn will be auctioned in the Pepro program, 300,000 tons in the PEP program and another 7,400 options contracts will be available.