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August 10, 2017

Brazil President to Inaugurate Corn-Ethanol Facility in Mato Grosso

Brazil's Agricultural Minister, Blairo Maggi, recently confirmed that the Brazilian President, Michel Temer, is scheduled to be in the city of Lucas do Rio Verde in central Mato Grosso on Friday, August 11th to inaugurate a new corn-based ethanol facility, according to So Noticias.

The US$ 115 million FS Bioenergy facility was constructed by Fiagril and the Summit Agricultural Group. The facility will utilize American technology to produce 250 million liters of ethanol, 6,200 tons of corn oil, and 60,000 megawatts of excess electricity annually.

The corn used in the facility will be produced in the municipalities of Lucas do Rio Verde, Sorriso, Nova Mutum and other nearby municipalities. The ethanol produced at the facility will be distributed in Mato Grosso and in other northern Brazilian states.

During construction, the facility employed as many as 1,000 construction workers. Once operational, the plant is expected to have 200 permanent employees.

Nearly all the ethanol in Brazil is produced from sugarcane, but the farmers in Mato Grosso produce an excess of corn and corn-based ethanol production is seen as a way to support local corn prices. Conab estimates that Mato Grosso will produce 26.8 million tons of corn in 2017, but the domestic demand for corn in the state is only a little more than 3 million tons. The excess supply of corn is destined for export either through ports on the Amazon River or through ports in southern Brazil.

Transporting the corn to export facilities is extremely expensive costing as much as $2.00 per bushel or more during peak periods. The high transportation costs contributes to the low domestic corn prices for farmers in the state.

The price necessary to turn a profit on safrinha corn production in Mato Grosso is in the range of R$ 18 to R$ 20 per sack (approximately $2.62 to $2.91 per bushel). The current local prices in central Mato Grosso is in the range of R$ 12 to R$ 13 per sack or approximately $1.75 to $1.90 per bushel. The government has tried to help out by conducting auctions where they paid the guaranteed minimum price for corn which is R$ 16.50 per sack or approximately $2.40 per bushel, but the government's efforts have had only a small impact on prices.

Farmers are hoping that more corn-based ethanol production will increase the demand for their corn. In contrast, ethanol producers see an opportunity to generate profits due to the generally low corn prices in the state.

This will be the President's first trip to Mato Grosso since assuming the presidency after the former president Dilma Rousseff was impeached last year. In addition to inaugurating the ethanol facility, he will preside over the official start of the cotton harvest in the state.