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May 31, 2016

Corn Scarcity points to Lack of Grain Storage in Brazil

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

The Soybean and Corn Producer Association of Mato Grosso (Aprosoja/MT) has joined together with the Banco do Brazil to promote the construction of grain storage units in the state. Currently there is 32 million tons of grain storage in the state and the state produces 50 million tons of grain, so only 64% of the state's production could be stored. Fortunately, the soybeans and corn crops are harvested at different times of the year and the harvest stretch over several months, so not all the grain needs to be stored at the same time.

The grain storage situation is expected to get worse in Mato Grosso and in the rest of Brazil. The Mato Grosso Institute of Agricultural Economics (Imea) is estimating that the state will produce 90 million tons of grain by 2025, so there is an urgent need to establish programs for the building of additional storage units. Most of the corn in Mato Grosso is harvested during June and July, which is the dry season when very little rain falls. As a result, much of the corn is stored in open-air piles until it can be shipped to exporters or livestock producers in southern Brazil.

Everyone agrees that open-air storage is not an acceptable situation and that more resources must be dedicated to the construction of additional storage units. In fact, the director of the Banco do Brazil in the state of Mato Grosso has indicated that programs are being established to facilitate the construction of storage unites and that the first 100 proposals for grain storage construction would be given priority.

A lack of grain storage continues to be a chronic problem in Brazil. The Food and Agriculture of the United Nations recommends that a country should have the capacity to store 120% of its annual grain production. Brazil currently has the capacity to store less than 80% of its grain production. This lack of storage is painfully obvious right now in Brazil as the country struggles not to run out of corn before the safrinha corn harvest gets underway.