Jan 27, 2010
Lack Of Storage Could Force Quick Sale Of Brazilian Soybeans
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The soybean harvest has already begun in the center-west region of Brazil, but many grain silos in Mato Grosso and Goias are still full of last year's safrinha corn crop. As a result, this lack of adequate storage space could force Brazilian soybean farmers to sell their 2009-10-soybean production quicker than normal. The lack of storage is the result of a big safrinha corn crop, low domestic corn prices, disappointing corn exports and inaction on the part of the federal government to move out the government owned corn.
Farmers and grain elevator owners have been petitioning the federal government for months to do something about the huge amount of safrinha corn still in the silos. Harvest has already begun in the center-west region of Brazil and by all indications; it is going to be a record crop, yet many of the silos in the regions are still full of last year's corn crop. Without alternatives for storage, farmers are going to be forced to sell their production to whoever has adequate storage, which are usually the multinational grain companies. They can either price the soybeans at the time they deliver the grain to the multinational or they receive a credit for the grain and agree to price it at a later agreed upon date.
A grain elevator in Chapadao do Ceu, Goias, indicated that 60% of their four grain silos are still full of last year's corn. In the center-west region of Brazil, 80% of the grain elevators that store grain for Conab are in a similar situation. Many elevators have already stated that they need all the available space for soybeans and that they will not take in any corn whatsoever. As a result, there are going to be a lot of corn piled on the ground in central Brazil.
In Mato Grosso, officials from Conab stated that they would start removing the government owned corn on January 4th and that the operation would take 40 days to complete. As of the fourth week of January, only a tiny percentage of the corn has actually been moved and there is no scheduled date when the removal will be completed.