March 19, 2013

Logistical Problems Slow Sales of Soy and Corn in Mato Grosso

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

As farmers wind down the soybean harvest in Mato Grosso, they have sold less of their 2012/13 soybean crop than what had been anticipated. According to the Mato Grosso Institute of Agricultural Economics (Imea), farmers in the state have sold 76% of their anticipated 2012/13 soybean production, which is significantly less than what had been sold last year at this time.

One of the principal reasons for the slow sales are problems the grain companies are having storing and transporting the record large crop. They have been slow in shipping out the grain due to a lack of trucks and long waiting times to unload at rail terminals and the ports of Paranagua and Santos. The grain companies are reluctant to purchase any more grain until they are more certain about their storage situation.

The falling soybean prices and high transportation costs have also convinced farmers to take a wait and see attitude toward future sales.

Farmers in Mato Grosso finished planting their safrinha corn during the second week of March, but they have only contracted 20% of the anticipated safrinha corn production, which is an increase of only 2.5% compared to a month earlier. Lower prices have turned farmers cautious and the grain companies are even more uncertain about their corn storage situation than they are about soybeans.

The current cost of transporting corn from Sorriso in central Mato Grosso to the Port of Santos in southeastern Brazil is actually more than the cost of the corn prompting some observers to speculate that the federal government will need to step in and subsidize the purchase and transport of the corn in order to assure a profit margin for the farmers.