Aug 31, 2023

As Farmers in Mato Grosso Prepare for 2023/24, Prices Disappoint

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

Mato Grosso is Brazil's largest producing state of soybeans, corn, cotton, and cattle and as farmers are preparing to start planting the 2023/24 crops, the current grain prices are disappointing.

The Mato Grosso Institute of Agricultural Economics (Imea) reported that the average price of corn in the state on August 25, 2023 was R$ 34.23 per sack (approximately $3.20 per bushel) compared to R$ 62.05 per sack a year earlier (approximately $5.80 per bushel). This represents a reduction of 44.8%. The decline in price is due to record safrinha corn production and weak international prices.

Soybeans have fared a little better, but not much. The soybean price in Mato Grosso on August 25, 2023 was R$ 118.00 per sack (approximately $11.00 per bushel) compared to R$ 180.00 per sack a year earlier. This represents a reduction of 34%.

Market observers might look at the price ratio between soybeans and corn, which is 3.4, and conclude that it favors soybeans and that farmers would plant more soybeans at the expense of corn, but that does not apply for the state of Mato Grosso.

Soybeans and corn do not compete for the same acreage in the state. All the soybeans in the state are planted as the first crop and virtually all the corn in the state is planted as the safrinha crop following soybeans. Safrinha corn does compete with safrinha cotton in the state and there are some indications that cotton may take away a few hectares of corn, but the corn crop is much bigger at 12 million hectares compared to 1.2 million hectares of cotton.

Many farmers in the state lost money on their 2022/23 safrinha corn and if prices remain weak, there are reports that some of the safrinha corn acreage may be switched to safrinha cotton or other crops instead.