South America Calling

Eastern Mato Grosso Corn Planting Delayed

NOVA XAVANTINA, Brazil (DTN) -- Dry weather in eastern Mato Grosso has not only hurt soybeans, but the delays to the summer crop will also force many to plant second-crop corn later than recommended in this expansion region of Brazil's grain belt.

But that is not going to stop farmers from increasing area amid extremely strong domestic prices.

"The window for planting corn closes at the end of February, but most will plant later anyway in the hope that because rains arrived late, they will go on longer," said Carlos Alberto Petter, who farms 2,750 acres in Nova Xavantina, eastern Mato Grosso, and is the treasurer for the local farm union.

The region had only planted about 15% of second-crop corn as of a week ago amid a two- to three-week delay in soybean harvesting, said the farmer during a visit to the region by the Rally da Safra crop tour.

In eastern Mato Grosso, as across large parts of the Brazilian grain belt, a growing proportion of soybean area is double cropped.

The region plants corn on 21% of its 4.2 million soybean acres, according to Agroconsult, the farm consultancy that runs the Rally da Safra tour.

Timely planting is important because summer rains typically end in mid-April, giving way to an arid winter. If the crop hasn't gone through key reproductive phases before the rains stop, obviously the corn suffers.

The reason Petter and his colleagues are willing to run these risks this year are the excellent prices.

Farmers have signed forward contracts on second-crop corn at between R$20 to R$24 per 60-kilogram bag ($2.11 to $2.54 per bushel) in the region, which might not sound like much but is up around 45% from last year. Prices have been driven higher by the devaluation of the Brazilian real, which has fallen a third against the dollar since the start of 2015, and strong export demand.

Growers jumped at these prices and, as a result, some 40% to 50% of the upcoming corn crop has already been sold in the region.

"Farmers have already sold, so they have to plant," said Osmar Frizzo, vice-president of the farm union in Querencia, the main grain town in the region.

Indeed, slightly to the north in Canarana, farmers say they will opt to plant more corn in order to ensure they meet contracts.

The east of Mato Grosso has benefitted more than most regions by the opening of grain terminals on Brazil's northern coast.

Isolated from major centers like Rondonopolis and Sorriso, freight costs were traditionally very high.

But the opening of grain terminals in Bacarena and Itaqui, for example, has created a demand to freight corn and soybeans north, including via north-south railway, which cuts costs. And another big portion goes via truck to captive markets in the north and northeast, where it isn't produced.

"Around 90% of our corn goes north," said Gilmar Alves da Silva, the agriculture secretary in Vila Rica, northeastern Mato Grosso.

This has made a big difference to prices in the northeast of the state. Indeed, prices in Canarana and Vila Rica are currently equivalent to those in Sorriso, a much better-connected grain center in Mato Grosso's center-north.

And should plans to open up a barge route along the Tocantins and Araguaia rivers to Belem in the north actually be implemented, freight costs would fall dramatically.

In the meantime, strong export demand for Brazilian corn -- the country exported a record 32 million metric tons in 2015-16 -- will continue to drive expansion of second-crop corn area in the region and underpin expansion in the northeast of the state.


That expansion is not unlimited, though.

The idea that Mato Grosso has inexhaustible reserves of degraded pasture to expand grain production into is something of a fallacy, said those interviewed during the crop tour.

For example, in Querencia, the center of grain production in the east where around 950,000 acres of soybean is currently sown, farmers have converted nearly all the degraded pasture that is suitable for grain production.

"There is only another 1% or 2% to expand onto. The rest of the pasture is poor land or by water," said Frizzo.

Farther north there is more land to be converted. In Vila Rica, an area relatively new to grain production, soybeans and corn are only planted on 65,000 acres, and there is another 1 million acres of pasture to convert. However, not all of this is prime land.

"There is sometimes a reason this pasture has degraded. Some of it shouldn't have been cleared in the first place," said Fabio Meneghin, a partner at Agroconsult.

With it now virtually impossible to obtain licenses to clear forest or scrub in the state, the stock of land on which to expand has severely diminished.

Agroconsult estimates Brazilian second-crop corn production will rise 8% to 58.8 mmt in 2015-16 on an 11% increase in planted area.

Alastair Stewart can be reached at

Follow him on Twitter @astewartbrazil



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