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July 25, 2014

Corn Prices make small Rebound in Mato Grosso, Brazil

After reaching the low for the year two weeks ago, corn prices in Mato Grosso have since recovered somewhat. According to the Mato Grosso Institute of Agricultural Economics (Imea), the corn price in Sorriso is now R$ 11.50 or US$ 2.37 per bushel compared to two weeks ago when it was R$ 10.00 per sack or US$ 2.06 per bushel.

The improved corn prices seems to have been the result of the Minister of Agriculture assuring farmers in the state that the federal government is working hard to make sure they receive the guaranteed minimum price for their corn of R$ 13.56 per sack (approximately US$ 2.80 per bushel). With those assurances, farmers are now reluctant to sell their corn to the market but would rather wait for the government's Pepro Program and its guaranteed minimum price. Imea estimates that farmers in the state have sold approximately 28% of their anticipated corn production. If farmers continue to be reluctant sellers, it's possible that the harvest lows in the state may have already been set.

The corn harvest in Mato Grosso is approaching 50% with farmers harvesting 8.5 million tons thus far. The average yield is estimated at 91.6 sacks per hectare (5,496 kg/ha or 84.6 bu/ac). Last year at this time 57% of the crop had been harvested or 13 million tons.

Corn exports from Brazil are certainly getting off to a slower start than last year. Reuters is reporting that the corn lineup at Brazilian ports is down 60% compared to 2013. Currently, the corn lineup in Brazil consists of 35 vessels waiting to load 1.8 million tons. A year ago the lineup had 86 vessels waiting to load 4.5 million tons of corn. This year the lineup only includes vessels up until August, whereas last year at this time, it included vessels up until October.

Part of the reason for the reduced lineup is the improved performances of the Brazilian ports. The more efficient operations at the ports has reduced the pressure to send vessels to Brazil earlier than needed just to be sure they got in line.

The rhythm of corn exports from Brazil continues to be slow. According to the Export Secretary, during the first three weeks of July, the corn export pace has been 7,500 tons per day after 4,400 tons per day in June. The July number represents a 76% drop compared to the 32,000 tons per day in July of 2013.

Traditionally, corn exports from Brazil start to accelerate in August as the second crop of corn hits the market. Conab is estimating that Brazil will export 21 million tons of corn during the 2013/14 export season ending in January 2015. During the first five months of the period Brazil has exported 2.4 million tons of corn with 18.6 million tons left to go before next January. During the 2012/13 season, Brazil exported a record 26.2 million tons of corn.