June 27, 2019

Cost of Producing Corn and Cotton in Mato Grosso on the Rise

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

Farmers in Brazil are in the process of planning their 2019/20 crops which they will start planting in August and September. The state of Mato Grosso is the largest corn and cotton producing state in Brazil and the Mato Grosso Institute of Agricultural Economics (Imea) recently indicated that the cost of producing both crops in 2019/20 is on the rise.

For high technology corn production, Imea is estimating that the cost of production in 2019/20 will be R$ 2,724 per hectare. This would equate to approximately $3.13 per bushel if a farmer produced 100 sacks per hectare (92.4 bu/ac) using an exchange rate of 3.8 Brazilian reals per dollar.

This May cost estimate was higher than the April estimate due primarily to a 2.7% wakening of the Brazilian currency with influenced the purchase of inputs priced in dollars. The cost of agricultural chemicals increased 2.4% in May, whereas the cost of macronutrients declined 1.2% in May. The decline in the cost of macronutrients was due to the reduced demand from the U.S. caused by reduced corn acreage. The cost of freight to move the fertilizers from ports in southern Brazil to Mato Grosso actually declined in May due to a greater availability of trucks.

Farmers in the municipality of Nova Mutum, which is located in the mid-north region of Mato Grosso, estimate that if the corn price was $2.15 per bushel, it would take a yield of 120 sacks per hectare, or 110 bu/ac to break even. These yields may seem low compared to yields in the U.S., but virtually all the corn in Mato Grosso is a second crop planted after soybeans.

In their May report, Imea estimated the cost of producing cotton in Mato Grosso in 2019/20 is R$ 9,146 per hectare or approximately $975 per acre. This represents an increase of approximately 2% compared to April. The main reason for the increase was once again the higher cost of inputs priced in dollars. The vast majority of cotton in Mat Grosso is also produced as a second crop after soybeans.