April 29, 2013

Corn Prices Slump in Mato Grosso Anticipating Good Corn Crop

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

The weather has generally been good for the majority of the safrinha corn crop in Mato Grosso, which is entering into the grain filling phase in good condition. If the crop was planted before the end of February, it pollinated successfully and is in the process of filling grain. If it was planted in early March, it is just now entering into pollination.

The earlier planted corn only needs one or two more good rains of 1-2 inches in order to be assured of good yields. Due to delays in harvesting the soybeans, approximately 15% to 20% of the safrinha corn in Mato Grosso was planted after the recommended planting window closed on February 20th. The late-planted corn is just now pollinating and it will need additional rainfall throughout the month of May in order to avoid moisture stresses during the grain filling period.

According to the Mato Grosso Institute of Agricultural Economics (Imea), the average safrinha corn yield in the state is expected to be 88 sacks per hectare (5,280 kg/ha or 81 bu/ac), which is 8 sacks per hectare (480 kg/ha or 7 bu/ac) above their last estimate but still 16 sacks per hectare (960 kg/ha or 15 bu/ac) below last year's record yield of 104 sacks per hectare (6,240 kg/ha or 96 bu/ac).

While the safrinha corn yields may be good in the state, the corn prices are much lower than what producers had hoped for when they planted their corn. Corn prices at harvest time (June-July) are expected to be in the range of R$ 10.00 to R$ 11.00 per sack, which is below the cost of production estimated at R$ 12.00 to R$ 13.00 per sack (approximately US$ 2.75 to 3.00 per bushel). As a result, very little of the anticipated corn production has been sold thus far. Imea estimates that only 22% of the corn has been priced compared to the 47% that had been priced last year at this time.

Farm organizations in the state have already indicated their desire for the federal government to step in and help support the corn prices. Conab has already indicated that they will purchase some of the corn at the guaranteed minimum price through a series of auctions although the details have not yet been announced.

Producers are also worried that there will not be enough storage space for the corn. The record large soybean crop has been slow to leave the state which means that many storage units will probably still be full of soybeans when the corn harvest begins in early June. This may force farmers to sell some of their corn immediately after harvest for a loss.

Farmers in the state have already indicated that they intend to plant less safrinha corn next year opting for crops that are less costly to plant such as grain sorghum, sunflowers, dry beans, millet, and rice. If cotton prices continue to strengthen, they may plant more safrinha cotton next year as well.