July 31, 2012

Mato Grosso Out of Storage Space for Huge Safrinha Corn Crop

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

Farmers in Mato Grosso have harvested approximately 80% of their 2012 safrinha corn crop, but many grain elevators have already run out of storage space and some are storing it outside or even refusing to accept any more corn, at least for the time being. The main problem this year has been the huge increase in safrinha corn production estimated by the Mato Grosso Institute of Agricultural Economics (Imea) at 14 million tons. During the 2011 growing season, the safrinha corn crop was only 7.2 million tons.

Due to a lack of on-farm storage space, some farmers have opted to store their corn in silo-bags while they wait for space to open up at their local grain elevator. For farmers who don't have on-farm storage or silo-bags, they must temporarily suspend harvesting and wait for space to open up at the grain elevator.

According to Conab, the total storage capacity in Mato Grosso is 27.6 million tons. The total production of soybeans and corn in the state during the last growing season was 35 million tons. The two crops are produced in sequence and not at the same time, thus avoiding an even larger storage problem. Additionally, the harvest season for both soybeans and corn is spread out over several months so some of the earliest harvested grain can be shipped out of the state in time to free up space the later harvested crop.

It is estimated that 70% of the corn has already been sold, so theatrically the grain companies should be moving the corn to end users or exporters on a daily basis freeing up space for newly harvested corn. Much of this storage problem is the result of heavy reliance on truck transport to move the grain. There is a general lack of sufficient trucks to move such a large production of grain in a timely fashion. Additionally, Brazilian truckers have recently been conducting a series of strikes protesting low freight rates. Independent truckers feel they cannot make a living wage given the low freight rates, poor condition of Brazilian highways, high cost of fuel and maintenance in addition to high taxes.