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December 20, 2019

2019 Corn Prices in Mato Grosso Averaged 17% More than in 2018

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

It has been a good year for corn producers in Mato Grosso. Not only did they have a good corn crop, the corn prices were strong as well. The Mato Grosso Institute of Agricultural Economics (Imea) reported that the price of corn in the state will finish 2019 with an average price of R$ 23.76 per sack (approximatey$2.70 per bushel), which is 17% higher than in 2018.

Tight corn supplies in Brazil over the next few months and strong demand for corn are expected to support corn prices as farmers make their decisions on how much safrinha corn to plant in 2020. Imea is estimating that the corn acreage in Mato Grosso in 2019/20 will increase 2.3% to 4.97 million hectares (12.2 million acres).

The domestic demand for corn for ethanol production continues to increase as more corn-based ethanol facilities are constructed. Brazil already has 8 facilities that use corn to make ethanol, 6 are under construction, and at least 7 are in the design phase. Most of those facilities are located in the center-west region of Brazil where there is an excess of corn production. Export demand is also expected to remain strong.

Mato Grosso is the largest corn producing state in Brazil and farmers in the state have forward contracted 51% of their anticipated corn production. Virtually all the corn in the state is planted after farmers harvest their first crop of soybeans. The ideal planting window for safrinha corn closes about the third week of February, but some of the corn may be planted later than normal this year due to a delay in the soybean planting.

The price for soybeans in Mato Grosso in 2019 averaged R$ 66.93 per sack (approximately $7.60 per bushel), which was an increase of 0.8% compared to 2018. The weakened Brazilian currency during the second half of 2019 encouraged higher domestic soybean prices.