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September 10, 2020

Mato Grosso to Produce More Corn than Soybeans in 2020/21

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

The Mato Grosso Institute of Agricultural Economics (Imea) is estimating that farmers in Mato Grosso will increase their 2020/21 corn acreage by 5%. During the 2019/20 growing season, the corn acreage in the state increased 4.3%. Mato Grosso is Brazil's largest corn producing state followed by the state of Parana.

Imea is forecasting that the state will produce 36.2 million tons of corn in 2020/21, which will be the first time that the corn production in the state will surpass the soybeans production. During the 2019/20 growing season, the state produced 35.4 million tons of corn with a statewide yield of 109 sacks per hectare (103.9 bu/ac).

Corn supplies are very tight in Brazil due to the strong demand from exports, the livestock sector, and corn-based ethanol production. The devalued Brazilian currency makes Brazil's grain exports very competitive in the international market. The livestock sector in Brazil is booming due to the strong demand for protein from China. Therefore, corn is in high demand for animal rations. Additionally, there is increased demand for corn from the 16 corn-based ethanol facilities in Brazil. Over 8% of Brazil's total ethanol production is now being produced from corn.

As a result of the strong demand and tight supplies, Brazilian farmers are receiving record high prices for their corn even though the safrinha corn harvest in Brazil is not yet complete. Farmers in Mato Grosso have sold 92% of their 2019/20 corn production, which was an increase of 2.4% during the month of August. Farmers have also sold more than 50% of their anticipated 2020/21 corn production as well.

The corn acreage increase in Mato Grosso is coming in part at the expense of cotton. Safrinha corn and safrinha cotton compete for the same acreage in the state. While corn prices are very strong, cotton prices are relatively weak, which is encouraging farmers to reduce some of their cotton acreage in favor of more corn.

Safrinha cotton in Mato Grosso will be planted next January and the safrinha corn will be planted next January and February. Both crops will be planted after the first crop of soybeans are harvested.