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December 13, 2018

Mato Grosso Farmers have sold 36% of their 2018/19 Safrinha Corn

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

The Mato Grosso Institute of Agricultural Economics (Imea) reported earlier this week that up until the first week of December, farmers in the state had sold 91.7% of their 2017/18 corn production, which is up 3% from a month earlier.

For the 2018/19 safrinha corn crop that will be harvested next May/June/July, farmers had sold 36% of the crop which is up only 2.8% from a month earlier. Forward selling of the safrinha corn crop had slowed in recent months due to a stronger Brazilian currency, uncertainty over freight rates, and a large volume of corn available corn from the United States which resulted in weaker domestic corn prices.

Even with the recent slowdown in forward contracting, the selling pace this year is nearly 20% ahead of last year at this time. Forward selling of the safrinha corn was very slow last year due to weaker prices and more importantly, uncertainty as to when farmers would be able to plant their safrinha corn and the yield potential of the corn.

Their cautious approach to selling ended up being the correct strategy. Last year, the soybean harvest in Mato Grosso was delayed because the soybean planting had been delayed. Farmers in the state were forced to plant 30-40% of their safrinha corn after the ideal planting window had closed about the third week of February. Unfortunately, the summer rainy season ended earlier than normal last year resulting in a very disappointing safrinha corn crop.

In contrast, the situation this year is just the opposite. The soybeans in Mato Grosso were planted at a record fast pace, which means that the safrinha corn will likely be planted early as well. Early planting of the safrinha corn is highly correlated with a higher yield potential. Therefore, farmers in the state are anticipating much better results from their 2018/19 safrinha corn compared to last year.