July 11, 2013

Brazilian Gov. Aggressively Helping Mato Grosso Corn Farmers

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

The Brazilian government has adopted an aggressive approach toward resolving the problem of too much corn and too little storage space in the state of Mato Grosso. The Brazilian Minister of Agriculture, Antonio Andrade, has indicated that the federal government is authorized to spend up to R$ 700 million and purchase up to 10 million tons of corn at a series of auctions across the state.

During these auctions, the government pays the producer close to the minimum price for corn set by the government, which is approximately R$ 13 per sack. The government's minimum price is much better than the current market price in the state which has fallen to as low as R$ 9.50 to R$ 10.00 per sack due to harvest pressures and too little storage space. If a farmer does not have on-farm storage and the local grain elevator is already full, the farmer may not have any other option other than to accept these very low market prices.

The program is expected to be of considerable help to farmers in northern Mato Grosso where corn prices are the lowest in three years and the grain is already being stored outside due to lack of storage space. After several auctions, it is expected that the market prices will start to approach the minimum price set by the government.

Early yields from central Mato Grosso are above expectations, but the first corn to be harvested is nearly always the best yielding corn in the state. The Mato Grosso Institute of Agricultural Economics is expecting the safrinha corn yield in the state to be 96 sacks per hectare or 89 bu/ac.

Mato Grosso farmers have sold 36% of the anticipated corn production compared to 54% sold last year at this time.