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August 9, 2017

Corn Harvest in Mato Grosso Wrapping Up, Prices Disappoint

The safrinha corn harvest in the municipality of Sorriso, which is located in central Mato Grosso, is essentially complete. The local Rural Syndicate indicated that 99% of the 400,000 hectares of safrinha corn have been harvested. The safrinha corn acreage in the municipality increased 30% this year after hot and dry weather last year resulted in a cut in acreage. The average yield in the region is expected to be 121 sacks per hectare (111.8 bu/ac), which are very good yields. Mato Grosso is the largest corn producing state in Brazil and Sorriso is the largest corn producing municipality in Brazil.

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

As a result, farmers in the region have been slow sellers of their corn crop in the hope that prices will improve going forward. Any improvement in price would depend on a series of factors including: weather concerns in the United States, the currency exchange rate between the Brazilian real and the U.S. dollar, and the Brazilian government's efforts to guarantee the minimum price for the corn.