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April 26, 2018

Domestic Corn Prices Strengthen in Mato Grosso

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

The Mato Grosso Institute of Agricultural Economics (Imea) is reporting a significant increase in domestic corn prices in the state of Mato Grosso. In some parts of the state, the corn price has increased 12% in a week. In some locations, the price for a sack of corn is up to R$ 30 per sack (approximately $4.07 per bushel) compared to R$ 27.15 per sack a week ago (approximately $3.68 per bushel) although not all farmers are that fortunate. In the municipality of Nova Mutum in central Mato Grosso for example, the price of corn went from R$ 16.00 per sack last week (approximately $2.17 per bushel) to R$ 21.00 per sack this week (approximately $2.85 per bushel).

Strong demand for corn is expected to support domestic corn prices for the remainder of the year in Brazil. The situation this year is very different from a year ago. Last year at this time, the price of corn in Mato Grosso was generally below the minimum price set by the government which was R$ 16.50 per sack (approximately $2.30 per bushel)

In their weekly report, Imea is estimating that Mato Grosso will produce 26.0 million tons of corn in 2017/18. The domestic consumption in the state is expected to be 5.23 million tons or 20% of the total, 4.980 tons (19%) will be shipped to other Brazilian states where corn production has declined this year, and 15.680 million tons will go into the export market (60%).

The domestic demand for corn in the state continues to increased due mainly to a corn-based ethanol facility in the city of Lucas do Rio Verde that started operating last June. The company that operates the facility has already announced that they plan to double the capacity of the existing facility as well as build a second corn-based ethanol facility in central Mato Grosso. In addition, there are at least four other corn ethanol facilities in the planning stages in Mato Grosso.

This is all good news for farmers in the state who have sold 44% of their anticipated 2017/18 corn production, which is greater than the 5-year average of 40.6% of the corn being sold at this time of the year.