Jul 22, 2010
Corn Yields and Prices Disappoint Mato Grosso Farmers
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Farmers in Mato Grosso are finishing up harvesting the safrinha corn crop and they continue to work on harvesting the state's cotton crop. Both crops were adversely affected by the early onset of the dry season and disappointing yields have been reported.
The farmers in Mato Grosso planted approximately 2 million hectares of safrinha corn and 80% of the crop has been harvested, which is 35% more than the 45% of the corn crop that was harvested last year at this time. The estimates of the safrinha corn yield across the state varies from 55 to 80 sacks per hectare (50 to 75 bushels per acre), which is approximately 20% less than last year. The lack of rain during May and June was the problem and the yields may end up being even lower when the harvest is completed.
In addition to disappointing yields, low cash prices for corn are leading to a very pessimistic outlook toward corn. The lowest cash corn prices in the state are found in Sorriso where buyers are offering R$ 6 per sack (US$ 1.75 per bushel), but farmers say they need at least R$ 9 per sack (US$ 2.50 per bushel) before they will consider selling. The highest corn prices in the state are in Canarana where buyers are offering R$ 11 a sack (US$ 3.15 per bushel), but farmers are holding out for at least R$ 12 per sack (US$ 3.40).
Leading to the depressed corn prices is the oversupply of corn clogging the storage bins in the state. There is so much corn in fact that it's being piled on the ground due to a lack of storage space. The government has been purchasing corn at its weekly auctions, but they have been slow to move the corn out of the state.
Approximately 30% of the cotton in the state has been harvested, which is five percent slower than last year's harvest pace. Dry weather has also affected the cotton crop and yields are expected to decline 25% compared to 2009. In contrast to corn, domestic cotton prices have strengthened and that trend is expected to continue through the end of harvest.
Nearly all the corn in Mato Grosso is grown after the soybean crop is harvested so there is very little competition for acreage between full season corn and soybeans. That is not the case in southern Brazil where full season corn and soybeans do compete for the same acreage. If domestic corn prices remain depressed in southern Brazil, farmers will not hesitate to switch some of the intended corn acres into additional soybean production, just like they did last year.