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July 29, 2011

Storage in Mato Grosso Adequate to Hold Reduced Safrinha Prod.

The pace of the safrinha corn harvest in Mato Grosso increased last week as 22% of the crop was harvested in one week. The safrinha corn harvest in Mato Grosso is now approaching 70% complete. The Mato Grosso Institute of Agricultural Economics (Imea) estimates the safrinha corn production in the state at 6.7 million tons vs. 8.4 million tons in 2010 (a decline of 20%). Imea continues to estimate that acreage was 10% lower than in 2010 and that the statewide yields will be 10% lower than last year. Many producers in the state still fell that the total production will be lower than the current estimate from Imea.

Regardless of the final production estimate, this year it is obvious that the recurring problem of inadequate storage space for the safrinha corn crop will not be repeated in 2011. The combination of reduced production and more aggressive marketing has opened up enough space to store all the corn.

During the past few years, farmers in the state opted to sell their corn to the federal government at a guaranteed minimum price rather than to sell it at a loss in the local market. The government purchased the corn in a series of auctions that stretched over many months forcing the farmers to store the grain in the meantime. The result was that the state ran out of storage space and much of the corn had to be stored on the ground for months at a time. That is not expected to be repeated this year.

Strong corn prices have persuaded many farmers to sell their corn as soon as the combines finished their work. Estimates are that farmers in the state have already sold 4 million tons of their corn production. Corn prices are expected to remain very strong in Brazil because of lower safrinha corn production in southern Brazil as well. A series of frost and freezes in late June severely impacted the safrinha corn crop in the states of Parana, Mato Grosso do Sul and Sao Paulo. Harvest is just getting under way in southern Brazil, but early estimates put the losses as high as 35%.

Interest in corn production is expected to result in increased full-season corn production in southern Brazil when planting starts in late August or early September as well as increased safrinha corn production in early 2012.