Jun 27, 2022

Safrinha Corn Harvest Pushes Brazilian Freight Rates Higher

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

Farmers in Mato Grosso are harvesting their safrinha corn and the high demand for trucks is resulting in higher freight rates. The freight rates always increase this time of the year due to the safrinha corn harvest, but they have increased even more this year due to higher fuel prices.

The cost of transporting corn by truck from Sorriso in central Mato Grosso to the Port of Santos during the first half of June averaged R$ 27.17 per sack or approximately $2.40 per bushel. During the first half of June in 2021, it averaged R$ 19.95 per sack or approximately $1.77 per bushel. Adding to the cost is the fact that the major highways from Sorriso to Santos are toll roads and the tolls alone equate to approximately $0.90 per bushel.

The safrinha crop in Mato Grosso is being harvested at a fast pace with 35.7% harvested as of late last week. Grain elevators are starting to temporarily store the corn in large open-air piles, which is a common practice in Mato Grosso. There is a low chance of rainfall over the next several months, so temporarily storing the corn outside is a low-risk operation. At a Cargill facility near the city of Sorriso in central Mato Grosso, there was already 21,000 tons of corn in a pile last week with 12,000 more tons coming in the next few days.

When completed, the pile will be covered and aerated to maintain the grain quality. The corn will be picked up before the summer rains return in September.

The increased use of railroads would be the best way to lower freight costs in Brazil and there has been some movement on that front. Work will start soon on the extension of the Ferronorte Railroad from southeastern Mato Grosso into central Mato Grosso. Bidding on a new railroad connecting Mato Grosso do Sul and Parana with the Port of Paranagua is expected during the second half of 2022.

Bottom line - any new railroad in Brazil will take years to build and Brazil is famous for construction delays, cost overruns, and running out of money before large projects such as these are completed. So, they will build new railroads in Brazil, but it will not be quick and it will not be easy. In the meantime, trucks will continue to transport approximately 60% of Brazil's grain production.