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February 5, 2020

Ethanol Stimulates Safrinha Corn Production in Mato Grosso

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

In their second assessment of the safrinha corn production in the state of Mato Grosso, the Mato Grosso Institute of Agricultural Economics (Imea) increased their estimate of the 2020 safrinha corn acreage and production.

Imea is now estimating that the safrinha corn acreage in the state will increase 4.9% to 5.1 million hectares (12.5 million acres) and the safrinha corn production will increased 0.8 million tons from their last estimate to 32.4 million tons. The anticipated statewide safrinha corn yield is estimated at 106.1 sacks per hectare (98.0 bu/ac).

Their optimistic assessment of the 2020 safrinha corn crop is due to favorable domestic corn prices resulting from strong exports an increased demand for corn from the new corn-based ethanol facilities in the state. The statewide average corn price last week was R$ 37.36 per sack (approximately $4.20 per bushel).

Corn-based ethanol production in the state has been a "game changer" for corn production in the state. The biggest increase in safrinha corn production is expected in the mid-north region of the state where over 80% of the demand for corn to produce ethanol in 2020 will be located. Brazil's first corn-based ethanol facility started production in June of 2017 and the increased demand for corn to produce ethanol is expected to continue increasing in the coming years as more facilities are completed and even more are in the planning phase.

Mato Grosso is the largest corn producing state in Brazil and as the demand for corn to produce ethanol, it is expected to cut into the state's corn exports, both to livestock producers in southern Brazil and internationally.