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July 22, 2014

Low Corn Prices in Mato Grosso Good for Corn-Ethanol Production

While corn producers in Mato Grosso are bemoaning the low corn prices, the few ethanol producers in the state that can utilize corn to make ethanol like the price and are stocking up on corn supplies.

Several sugar mills in Mato Grosso have been retrofitted to utilize corn to make ethanol when sugarcane is not available. Generally sugarcane is not available in the state between December and March due to the heavy rains during the rainy season. Most of the sugar mills close down during that period, but several mill owners decided to take advantage of the surplus of corn in the state and they retrofitted their plants to utilize corn or grain sorghum during the time when sugarcane is not available.

The Usimat sugar mill in the city of Campos de Julio in western Mato Grosso utilized 67,000 tons of corn in 2013/14 and expects to utilize 100,000 tons of corn between November 2014 and April 2015. They are already taking in corn and storing it to use later this year.

According to the plant manager, they are currently paying R$ 15 per sack (including freight and other costs) for their corn (US$ 3.10 per bushel). If corn prices are R$ 18 per sack or less (US$ 3.72 per bushel), corn is a better option than sugarcane to produce ethanol and it is still profitable to use corn with corn prices up to R$ 21 per sack (US$ 4.33 per bushel).

The ethanol plant now operates 340 days per year compared to the 210 days per year when it only used sugarcane to produce ethanol. Other sugar mills in the center-west region of Brazil have taken note of this new technology and have indicated that they too will retrofit their facilities to utilize corn when sugarcane is not available.