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July 30, 3015

Corn Harvest in Mato Grosso Advances to 65% Complete

Farmers in Mato Grosso made good progress last week in harvesting their safrinha corn crop which is now 65% complete according to the Mato Grosso Institute of Agricultural Economics (Imea). The harvest progress is up 15% over the past week, but it still is about 3% slower than last year. Imea estimates that farmers in the state will harvest 3.2 million hectares of safrinha corn for a total production of 20.3 million tons.

Producers are worried about the cost of production for the next corn crop due to the weakening of the Brazilian real against the U.S. dollar. Imea estimates that the cost of producing the 2015/16 safrinha corn crop will increase 13%. The Brazilian real devaluated 5% against the dollar last week and farmers in Brazil are expected to take advantage of the situation by forward contracting some of their anticipated 2015/16 corn crop. By mid-July farmers had already sold 5% of next year's corn crop.

The record corn crop is aggravating an already tight storage situation in the state. Grain elevators are piling corn in the open air due to a lack of storage and the situation is expected to get worse as the harvest progresses. The inadequate storage is also resulting in excessive storage losses. According to researchers from Embrapa Corn and Sorghum in the state of Minas Gerais, 15% or more of the corn in storage is lost due to inadequate storage conditions including: insects, fungus, microtoxins, and rodents. The storage losses are greatest for small family farmers who store the corn ears in rustic corn cribs where losses can reach 40%.

The new Tegram export grain terminal at the city of Sao Luis in northern Brazil received its first rail shipment of corn this week. The terminal started exporting soybeans in March and they have loaded 24 vessels with 1.5 million tons of soybeans thus far. Eight vessels of soybeans are scheduled to be loaded in August and two more in September. Gradually during the second half of the year the port will start exporting more corn and less soybeans and port officials feel they will move 800,000 to 1.0 million tons of corn by the end of the year.

The four warehouse at the port are operated by NovaAgri, Glencore, CGG Trading, and Amaggi/Louis Dreyfus. Up until this week, all the grain arrived at the port by truck but eventually 80% of the grain is expected to arrive by rail. The port sits at the northern terminus of the North South Railroad and it already receives large qualities of iron ore by rail for export.