Dec 08, 2009
Lack Of Storage Space Worries Soybean Farmers In Mato Grosso
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Much of the record 2009 safrinha corn crop in Mato Grosso is still in the silos occupying space that will be needed for the new crop soybeans. At the end of the 2009 safrinha harvest, many grain elevators had so much corn that they had to pile corn on the ground due to a lack of silo space. The abundant harvest caused corn prices to fall to below the cost of production in the state and farmers were reluctant to sell their corn at a loss. Other parts of Brazil could use the corn, but since the cost of transportation is so high in Brazil, if the farmers sold to the end users, he would lose even more money.
The answer to this dilemma is in the hands of the federal government. In recent years, the Brazilian government has set minimum prices for the major commodities in order to try to keep producers afloat during times of low prices. They do this by holding a series of auctions where they purchase the grain from the farmer at the minimum price and then sell it to the end users. If there is a loss involved in the transaction, the government makes up the difference. The problem is that these auctions are slow and not enough of them have been conducted to clear out the storage space for the impending soybean harvest.
Harvesting of the early soybeans in Mato Grosso will begin before the end of December and yet much of the storage space needed for the 2009-10 soybean crop is still occupied by the 2009 safrinha corn crop. During the first trimester of 2010 all of the nearly 6 million hectares of soybeans in Mato Grosso will be harvested and yet there is not enough storage space for the crop. If the storage space is not available when the soybean harvest gets into full swing, farmers may be forced to sell a larger percentage of their crop due to a lack of storage. For their part, the government has said that they will accelerate the pace of these auctions in order to fee up space, but many farmers are worried nonetheless.
Storage problems will persist in Mato Gross all through 2010. Farmers have already purchased 90% of their seed corn for the 2010 safrinha corn crop and it looks like the 2010 crop will be even larger than the 2009 crop. Last year, farmers in the state planted 1.67 million hectares of safrinha corn and that is expected to increase to more than 1.7 million hectares in 2010.