December 17, 2012

Second Corn-Based Ethanol Plant to be Built in Mato Grosso

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

The state of Mato Grosso is quickly becoming a major corn producing state in addition to already being the number one soybean producing state in Brazil. The cost of exporting the corn out of the state to Asia or Europe is very high and efforts are under way to utilize more of the corn within the state by building corn-based ethanol plants.

Virtually all the ethanol that is currently being produced in Brazil is derived from sugarcane with the majority of the sugarcane crop grown in southeastern Brazil, which is close to major population centers. The state of Mato Grosso has a small sugarcane industry but a major corn industry, so it makes sense to try to add value to the corn by turning it into ethanol instead of paying a hefty price to transport the corn out of the country.

The mayor of the city of Lucas do Rio Verde, which is located in central Mato Grosso, announced recently that a group of investors had chosen the city as a site for an ethanol plant that will utilize corn and grain sorghum as its feedstock. The cost of the project is estimated at USD 100 million and construction should begin during the second half of 2013. The plant is scheduled to use eight million sacks of corn (17.6 million bushels) annually and produce 190 million liters of ethanol in addition to DDGs for animal rations. The municipality of Lucas do Rio Verde already produces more than a million tons of corn annually with a large portion of the crop being exported to Asia or Europe.

This will be the second corn-based ethanol plant in the state with the first located in Campo Novo dos Parecis in western Mato Grosso. Both of the plants will utilize corn as the basic feedstock, but they will also be able to utilize grain sorghum as well.

While still small compared to corn, grain sorghum production is becoming a more popular option for a second grain crop following soybeans. Corn has a higher yield potential than grain sorghum, but the planting window for corn is more restricted. Corn generally needs to be planted by the third week of February to avoid the risk of dry weather during the grain filling period. Approximately 97% of the corn produced in Mato Grosso is planted as a second crop after the early-maturing soybeans are harvested.

Since grain sorghum is much more drought tolerant than corn, it is an attractive alternative to corn production in areas where the second grain crop will be planted past the end of February. Conab is estimating that Brazil will produce 2.2 million tons of grain sorghum in 2012/13 with Mato Grosso producing 409,000 tons or 18% of Brazil's total grain sorghum production.