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June 1, 2017

Safrinha Corn Harvest begins in Brazil and Corn Prices Decline

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

As Brazilian farmers start to harvest their 2016/17 safrinha corn, domestic corn prices in Brazil have declined and they could fall even further as the harvest advances.

Brazilian farmers have harvested approximately 1% of the 2016/17 safrinha corn crop in Mato Grosso and Parana, which are the two largest corn producing states in Brazil. Conab is estimating that the 2016/17 Brazilian safrinha corn crop will be a record 62.7 million tons.

According to Scot Consultoria, in the region of Sorriso in central Mato Grosso, the price of corn is currently R$ 13.20 per sack or approximately $1.93 per bushel. Compared to last year, the current price of corn in Sorriso is 63.8% lower than last year.

Even though the Brazilian government has conducted several auctions in which they purchased corn from farmers in Mato Grosso at the guaranteed minimum price of R$ 16.50 per sack (approximately $2.40 per bushel), the safrinha corn crop is so big that prices have continued to decline. Adding to the price declines is an oversupply of corn worldwide.

Brazilian farmers are concerned that corn prices could decline even further as the harvest pace accelerates. Brazilian farmers have been slow sellers of their anticipated corn production due to low prices. They are waiting for either a devaluation of the Brazilian currency or a weather problem to develop in the United States that could increase prices.

Farmers in Brazil are also concerned about a lack of storage for the record-large corn crop. Many grain silos are still full of soybeans from the record-large 2016/17 soybean crop. Therefore, much of the newly harvested corn will be piled outside. Open-air storage of corn during the dry season in central Brazil (May to September) is not a major concern as long as it is removed by the time the next rainy season begins in September.