Corn prices in Brazil's Mato Grosso likely to be firm near term: IMEA

New Delhi — Corn prices in Brazil's Mato Grosso state have shown no signs of easing and will likely be firm in the near term, the Instituto Mato-Grossense de Economia Agropecuria (IMEA) said in a report.

Mato Grosso is the largest grain producer in the country and accounts for over 50% of Brazil's corn exports.

As of Friday, average weekly corn prices in the state was at Real 39.68 ($7.90)/60 kg, up 69% from a year earlier, according to the institute.

Generally, price of corn eases towards March as harvests from the southern part of the country reach the market. However, an increase in demand from the livestock industry and corn-based ethanol producers have caused a shortage of supply in the domestic market.

Moreover, record exports during the last marketing year and a fall in the first corn crop yields in southern parts of Brazil this season have depleted the domestic stocks.

The persistent weakness in the real against the dollar has also encouraged farmers to sell more.

Farmers in Mato Grosso have already sold 73.4% of the projected 2019-20 second corn crop so far, compared with 52.9% at the same time last year, according to the IMEA.

While the weakening local currency has boosted crop sales, it has also increased the input costs of fertilizers and fungicides.

The variable cost of production for corn is now seen at Real 2,444.3/ha for 2020-21, up 1% from the current season and up 2% from the previous forecast, the report said.

Corn sowing in Mato Grosso nears completion with farmers planting in 99.6% of the projected area as of last week, the report added.

The second corn output in the state is estimated at 32.44 million mt for 2019-20, up 0.6% from a year earlier, with the area projected at 5.1 million hectares, up 5% year on year, the institute said previously.

In Brazil, the first corn crop is planted during September-December and harvested in February-May, while the second corn crop, also known as Safrinha corn, is planted after the soybean harvest in February-March and harvested in June-July.