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October 22, 2018

Mato Grosso could produce more Corn than Soybeans by 2022

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

The state of Mato Grosso is famous for its soybean production, but by the year 2022, the state may produce more corn than soybeans. That is the opinion of the Executive Director of the Syndicate of Sugar/Ethanol Industries of Mato Grosso (Sindalcool), Jorge dos Santos.

He is expecting that Mato Grosso will produce 30 million tons of corn in 2018/19 with 17 million tons going to export, 8 million tons will be shipped to other states primarily in southern and northeastern Brazil, 4 million tons used for animal feed within the state, and 1.5 million tons will be used for ethanol production.

One of the drivers for more corn production will be increasing amounts of corn used for ethanol production. Brazil's first corn-based ethanol facility is operational in Mato Grosso with a second scheduled to come on line in 2019. Other corn-based ethanol facilities are in the planning stages and a half dozen sugarcane mills have already been retrofitted to utilize corn when sugarcane is not available during the summer rainy season.

The byproduct of the corn-based ethanol production is the production of dry distillers grain (DDG's), which is then used for animal feed. So, as more corn is used for ethanol production, more DDG's are produced, which is an incentive for more livestock production, which then requires more corn - it's a nice feedback loop.

In a conventional corn-based ethanol facility, a ton of corn produces about 400 liters of ethanol and on average, 200 kilograms of DDG's. If more modern technology is used, up to 400 kilograms of DDG's can be produced from each ton of corn. The high protein DDG's can compete with soybean meal in animal rations at a much cheaper price.

Therefore, as more corn is used for ethanol production, it will be an incentive for increased production of beef, poultry, pork, and fish. With the high cost of transportation being a major concern in Mato Grosso, it is much more efficient to transport high value products such as ethanol, meat, or DDG's than transporting bulk corn to very distant ports. It can cost more to transport corn from central Mato Grosso to the ports of Santos or Paranagua (approximately 2,000 kilometers) than it does to purchase the corn.

During the 2017/18 growing season, approximately 50% of the soybeans in the state were followed by a second crop of corn and that percentage is expected to continue increasing as the demand for corn increases.