Feb 16, 2010
Domestic Prices For Corn In Brazil Is Below The Cost Of Production
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The corn crop in Brazil is preforming very well, so well in fact, that the market price for corn is below the cost of production in virtually all of Brazil. Even though Brazilian farmers cut back on their full-season corn acreage, the growing season has been such that the total corn production may surpass last year's crop adding to the burdensome supply picture.
Parana is the largest corn producing state in Brazil and even though the full season corn acreage is down 30% compared to last year, the full-season corn crop is only expected to be down 6% due to the drought induced low yields achieved in 2008-09. The safrinha crop acreage in Parana is expected to be down 7% as well, but the total safrinha corn crop is expected to be up 35% compared to last year, also due to last year's dry weather.
As of this week, approximately 10% to 12% of Parana's full-season corn crop has been harvested and good yields are being reported. Brazil carried over a huge supply of corn and if this year's crop turns out as good as everyone is expecting, the oversupply of corn in Brazil will continue unless exports pick up or internal demand improves.
Interior prices for corn are the lowest in Brazil since July 2007. Prices may vary a little from region to region, but basically they are below the cost of production in virtually all of Brazil. In Cascavel, in western Parana, the cost of production is about R$ 19 per sack for a production of 61 sacks per hectare, but the price for corn is between R$ 14 and R$ 15 per sack. The only way a farmer in western Parana can expect to make any money growing corn is to hope for extra good yields.
The average yield for full season corn in Parana is 120 sacks per hectare or 110 bushels per acre. The average yield for the safrinha corn crop in Parana is 70 sacks per hectare or 65 bushels per acre.
If corn prices do not improve in Brazil before the next planting season, Brazilian farmers may cut back even more on their full-season corn acreage in favor of additional soybean acreage.