May 26, 2010
Parts of Mato Grosso Receive 5% Normal Rainfall Last 6 Weeks
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The safrinha corn crop in Mato Grosso continues to be impacted by some of the driest conditions in ten years. In the driest regions of the state, some municipalities have seen their rainfall totals plummet 95% during April and the first half of May. In the municipality of Sorriso (central Mato Grosso), which is the largest soybean producing municipality in Brazil, 0.3 inches of rain fell during April compared to the normal of 5.5 inches. The municipality of Sapezal, which is located in western Mato Grosso, less than 50% of the normal rainfall occurred during April and the first half of May.
By the end of April, state agencies were already lowering their estimated yields for the safrinha corn crop in Mato Grosso. The Mato Grosso Institute of Agricultural Economics (Imea) estimated in March that the statewide corn yield would be 79 sacks per hectare (73 bu/ac). In April, they reduced the estimate to 72 sacks per hectare (66 bu/ac) and it is expected to fall even further. In 2009, the safrinha corn yield in Mato Grosso was 84 sacks per hectare (77.6 bu/ac).
Some of the earliest planted safrinha corn is starting to be harvested and farmers are reporting yield reduction of 30% compared to last year. The later the corn was planted, the lower the yields are expected to be.
If the yield is 80 sacks per hectare (74 bu/ac), Imea estimates that the cost of production would be R$ 10 per sack (US$ 2.90 per bushel). If the yield would fall to 72 sacks per hectare (66 bu/ac), the cost of production would increase to R$ 11.11 per sack (US$ 3.20 per bushel). The cash price for corn in the state is currently between R$ 7.00 and R$ 10.50 per sack (US$ 2.00 to US$ 3.00 per bushel). The government-set minimum price for corn in the state is R$ 13.98 per sack or US$ 3.95 per bushel, so it's easy to see why farmers in the state are waiting to sell their corn to the government instead of the cash market.