Jun 24, 2010
Lack of Storage Continues to be a Problem in Mato Grosso
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Even with the federal government purchasing corn on a weekly basis in Mato Grosso, there is still not enough storage space in the state to accommodate all the corn and soybeans at the same time. According to the Mato Grosso Institute of Agricultural Economics, farmers in Mato Grosso have harvested approximately 12% of their 2.0 million hectares of safrinha corn production and they are having a hard time finding a place to store the corn. A lot of the silos in the state are still being occupied by soybeans since many farmers are waiting for improved prices before they sell their production and the situation is only expected to get worse as the corn harvest progresses.
The high cost of transportation and low cash prices for corn have many farmers very frustrated. The average cost of freight from central Mato Grosso to the Port of Paranagua or the Port of Santos is R$ 220 per ton or approximately U$ 3.30 a bushel. The cash price of corn is approximately two reals per sack below the minimum price being offered by the government. Therefore, most farmers are opting to store the corn until they have a chance to sell it to the government.
The government has already conducted two auctions where they purchased corn from the farmers. Another ten auctions are scheduled on a weekly basis. Since the silos are already full of soybeans, much of the corn is being piled on the ground. Mato Grosso has a total private storage space of 28 million tons of which 2.9 million tons of storage is operated by Conab.
Conab has promised that the first corn bought by the government will be removed from the state by the end of October. The remainder of the corn is supposed to be removed from the state by December 31st. It is doubtful if Conab can meet this aggressive time commitment to remove several million tons because of their spotty track record. In June, Conab just finished removing 290,000 tons of corn from the 2008/09 crop that was supposed to have been moved by the end of February. They claim they were delayed by the soybean harvest and heavy rains during February.