South America Calling

Following four months of generally excellent growing conditions, Brazilian farmers are ratcheting up second-crop corn harvesting.

Early indications are that the crop will be spectacular, reaching 45.8 million metric tons (mmt), or 21% higher than last year, according to Safras e Mercado, a local farm consultancy.

Second-crop harvesting is 2.1% complete as of Friday, says Safras, and should accelerate over the next couple of weeks.

Second-crop corn is grown in Brazil's dry winter and so is at higher risk of suffering from a lack of moisture. In the south, it can also be hit by frost.

But over the last two years, conditions have been exceptional, allowing corn production to rise to the same levels as the ubiquitous summer soybean crop.

So, a massive output is guaranteed, following an 18% increase in area. Now comes the difficult task of marketing the crop.

As of the start of June, farmers had only sold about 5% of the crop, according to Fernando Muraro of AgRural, a grains consultancy.

That's a problem because local prices have slumped. In Mato Grosso, corn has been below 13 reals per 60-kilogram bag ($2.48 per bushel) for the past month, compared with 15 to 20 reals in the first half of last year, according to the Mato Grosso Agricultural economy Institute (IMEA).

The government is trying to mop up surplus corn, especially in Mato Grosso where it has acquired 1.4 mmt at auction this year, but farm leaders say the Agriculture Ministry has to buy much more.

The problem is farmers have nowhere to put the corn. The inability of Santos and Paranagua ports to deal with demand for soybean exports means that second-crop corn won't start leaving port in large volumes until August. Meanwhile, there are insufficient trucks to transport the grains out of the center-west and insufficient storage space to stock the produce on the farms.

It is these logistical problems that obviously are hurting farmers most. The impact can be seen in the 150% difference between the free-on-board corn price at Santos in the farm gate price in Sorriso, Mato Grosso.

These are tense times for Brazilian grain farmers in the Cerrado.

(AG)

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