Jul 12, 2010
Safrinha Corn Estimates in Mato Grosso Continue to Decline
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The two main governmental agencies that estimate crop production in the state of Mato Grosso have once again lowered their estimates for the 2010 safrinha corn crop in Mato Grosso. In its weekly report, the Mato Grosso Institute of Agricultural Economics (Imea) lowered its estimate of the safrinha corn production in Mato Grosso. They estimate the farmers in Mato Grosso planted 2 million hectares of safrinha corn (a record), but due to dry weather, the total corn production will be down at least 3.5% compared to the 8.5 million tons produced last year. Their current estimate of the safrinha corn crop is 8.2 million tons with an average yield of 4,099 kg/ha or 63 bu/ac.
Conab released its July estimates last week and they estimate the safrinha corn crop in Mato Grosso at 7.1 million tons, but it is based on only 1.8 million hectares planted, which is significantly lower than the corn acreage estimated by Imea. Conab estimates the average yield in the state is 3,900 kg/ha or 60 bu/ac.
It remains to be seen which estimate will turn out to be correct, but both estimates are expected to move lower as harvest progresses. The safrinha harvest in the state is 40% complete.
In the principal production regions of the state, the cash corn prices remain depressed due to excess supplies and no room to store the corn. The lack of storage space is forcing many grain elevators to pile the corn on the ground. In Sorriso, which is located in central Mato Grosso, recent cash corn prices have ranged between R$ 6 to R$ 7 per sack or US$ 1.75 to US$ 2.00 per bushel. In Primavera do Leste, located in southeastern Mato Grosso, cash prices are better at R$ 9.50 per sack or US$ 2.75 a bushel. In northeastern Mato Grosso where the dry weather hit even harder, corn prices are approximately RS 11 per sack or US$ 3.15 a bushel.
At these depressed prices, farmers are very reluctant to sell their corn in the cash market. They would much rather sell their corn to the Brazilian government at the guaranteed minimum price of R$ 13.95 per sack or US$ 3.95 a bushel. The government has been conducting weekly auctions where they have been purchasing corn, but the government will probably not buy enough corn to bring the supply back in line with the demand.
Even though corn prices in Mato Grosso are very low, it should not impact the potential soybean acreage in the state for the next growing season because almost all the corn in the state is planted as the safrinha corn following the soybean harvest. Less than a hundred thousand hectares of full season corn is planted in Mato Grosso compared to an estimated 2 million hectares of safrinha corn.