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June 16, 2017

Farmers in Mato Grosso have sold 60% of their Corn Production

Selling opportunities have become a little more favorable in Brazil and as a result, farmers in Mato Grosso have increased the forward contracting of their anticipated 2016/17 corn production.

According to the Mato Grosso Institute of Agricultural Economics (Imea), farmers in the state had sold 60.4% of their anticipated corn crop by the end of May. This represented an advance of 13.8% during the month.

Several factors led to the increased sales including: a weaker Brazilian currency, improved international corn prices, and actions by the government to stabilize the domestic corn price. In mid-May, the Brazilian currency weakened to 3.4 to the dollar for one day after reports of the Brazilian President was caught on tape discussing hush money for a politician caught up in the "Car Wash" corruption scandal. Farmers took advantage of the weaker currency to quickly sell some of their corn. In subsequent days, the Brazilian currency returned to its previous trading range of about 3.25 to the dollar, but has since been trading closer to 3.3 to the dollar.

Regardless of the actual daily exchange rate, the currency is now weaker than several months ago and that is better for Brazilian farmers because they will put more money in their pockets for every sack of corn they sell. As a result, farmers have taken advantage of the situation to increase sales of their corn and soybean crops.

The average selling price for corn in Mato Grosso during the month of May was R$ 16.10 per sack (approximately $2.28 per bushel), which represented an increase of 11% compared to April. One of the reasons for the increase has been several auctions conducted by the federal government where they purchased corn from producers at the guaranteed minimum price of R$ 16.50 per sack (approximately $2.34 per bushel).

As of last week, the safrinha corn harvest in Mato Grosso was 6.6% complete and nationwide, the safrinha corn harvest was 2.6% complete.