October 19, 2017

Mato Grosso Produces 6.5 Times more Corn than Consumed Locally

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Farmers in Mato Grosso have been steadily increasing their corn production in recent years, but they are now becoming a victim of their own success. Over production of corn in the state has led to low domestic prices that are below the cost of production.

The Mato Grosso Institute of Agricultural Economics (Imea) is forecasting that the state produced 30.4 million tons of corn in 2016/17 and that the domestic consumption of corn in the state from the 2016/17 crop will be 4.5 million tons. The domestic consumption is expected to increase 25% compared to a year earlier due to more cattle on feed in the state and the opening of Brazil's first corn-based ethanol facility.

The corn-based ethanol facility opened earlier this year with great fanfare in the city of Lucas do Rio Verde in central Mato Grosso. The Brazilian president attended the opening ceremony along with the Brazilian Minister of Agriculture. The Minister indicated that if the state had ten such facilities, they would consume approximately 6 million tons of corn annually. The ethanol produced in the facility will be sold in northern and northeastern Brazil. The corn-based facility is a departure from the hundreds of sugar/ethanol mills in Brazil that use sugarcane to produce ethanol.

Corn that is not consumed locally is either shipped to livestock producers in southern Brazil or exported. Imea is estimating that 6.4 million tons of corn will be shipped to southern Brazil and that 17.5 million tons will be exported. The volume of corn exported from the state represents an increase of 110% from the previous year. The federal government, through the actions of Conab, is also helping to utilize some of the excess corn in the state by purchasing approximately one million tons of corn through a series of auctions. Some of the corn purchased by the government will be shipped to northeastern Brazil where there is always a corn deficit.

Even with the increase in domestic consumption, the farmers in the state will still produce approximately 6.5 times more corn than what is consumed in the state. That is why farmers were very happy to see the opening of the corn-based ethanol facility. The facility is expected to support corn prices and it will utilize all the corn produced in a number of nearby municipalities.

All the corn produced in Mato Grosso is safrinha production planted after the first crop of soybeans are harvested. Safrinha corn is planted in the state in January and February and harvested in June and July.