Jan 29, 2016

Corn Prices in Rio Grande do Sul are 45% Higher than Last Year

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

As farmers in Rio Grande do Sul harvest their full-season corn, they are very surprised by the extremely good domestic corn prices in the state. Corn prices in the state are in the range of R$ 30 to R$ 32 reals per sack, which is 45% more than the R$ 22 per sack they received a year ago.

Corn prices have surged all across southern Brazil over the last few months due to the devaluation of the Brazilian currency which has resulted in record large corn exports from Brazil. The large exports have in turn led to corn shortages for livestock producers in southern Brazil. The livestock producers are having to compete with the exporters for a limited corn supply, thus the price increases.

Farmers in southern Brazil have also been reducing their full-season corn acreage over the past decade in favor of more first-crop soybeans. As a result, more than 65% of Brazil's corn crop is now produced as a second crop planted after soybeans and most of the second crop corn is planted in the west-central part of Brazil.

Farmers in Rio Grande do Sul generally only produce one crop of corn and the corn acreage in Rio Grande do Sul has declined for ten consecutive years. In their latest monthly report, Conab is expecting the state to produce 5.83 million tons of corn, which would be down 5.5% compared to the 6.17 million tons produced in 2015.

Farmers are always attentive to prices and the president of the Federation of Agricultural Cooperatives of Rio Grande do Sul (FecoAgro/RS), Paulo Pires, feels that if corn prices remain this strong until August or September, farmers in the state could increase their corn acreage in 2016/17 for the first time in a decade.