Farmers in Mato Grosso state, the country's largest grain producer, still have close to 2 million metric tons of corn left over from the winter crop, and will need to sell before January to make space for the summer soybean crop, according to the state's grain producers group Aprosoja.

Mato Grosso produced a bumper second crop corn last season, totaling a record 7.5 million metric tons (mmt). Sluggish demand and high freight costs, however, meant farmgate prices slumped as low as $2 a bushel at harvest time.

The government stepped in, buying over 3 mmt at a minimum price of around $3.50 a bushel, easing some of the pressure on overflowing bins, but farmers complain that it has not been enough.

According to them, the government needs to purchase another 600,000 to 1 million tons of corn, before January in order to make room for the new soybean harvest.

They also complain that the government has been slow in paying for corn sold at public auctions months ago. Many farmers use this use revenue to finance the main summer crop and as a result of payment delays they had to cut back on inputs.

Most of the corn bought by the government ends up in the northeast of the country, which has a growing pork and poultry industry, but little corn production of its own. This has upset farmers in Bahia state, who say Mato Grosso is flooding their market and driving down prices.

As one farmer in Bahia put it, the government is subsidizing one farmer at the expense of another.

Some also goes to exports. Corn shipments were up 27 percent from January to October, totaling 5.44 mmt, according to figures from the export governing body Secex.

A further 1.5 mmt of corn has been contracted for export up to December, which would put shipments at 7 mmt, compared to 6.4 mmt in 2008.