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November 7, 2017

Chinese Investors to build 30 Grain Silos in Mato Grosso

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

The governor of Mato Grosso, accompanied by various executives, agribusiness leaders, and mayors arrived in Beijing, China last Sunday to participate in an official trade mission that will meet with Chinese officials concerning additional investments in the state of Mato Grosso.

AgroNoticias reported that as part of the trade mission, representatives of the Chinese investors and the Brazilian contractor announced a project that will in construct 30 grain silos in the state of Mato Grosso. The R$ 1.5 billion investment (approximately $460 million) will help alleviate the chronic shortage of grain storage in the state. The grain silos would be built by NovaLog at 10 locations across the state. Upon completion, the grain silos are expected be sold to local companies, cooperatives, or individuals. The grain silos in the city of Nova Maringa are already under construction.

According to data from Conab, Brazil has a grain storage deficit of 50 million tons and Mato Grosso has a deficit of 19 million tons. This storage deficit can force farmers to sell their grain at harvest time when prices are generally at their lowest and transportation costs are generally at their highest.

The savings in transportation costs alone would go a long way toward paying for the silos. During the peak of the soybean harvest when the demand for trucks is the greatest, the transportation costs can be as high as $2.40 per bushel to move soybeans to distant export facilities. Several months later when the majority of the soybeans have already been shipped to export facilities, the cost of transporting the remaining soybeans to those same facilities can be as much as $1 per bushel less.