Brazil needs to invest $207.3 million to support corn prices: Imea

The Brazilian government will likely need to invest BLR1 billion ($207.3 million) in support of prices to corn producers to address the low prices in Mato Grosso, Cleiton Gauer, superintendent at the state’s agriculture institute IMEA, said in a press conference on Tuesday.

The figure would be necessary so that 8 million mt could be sold - the same volume as the last time the government supported corn sales to elevate prices, in 2017 - and compensate for the BLR8/bag ($1.66) difference between current prices and minimum price levels, he calculated.

The minimum price is established by the government for farmer selling to guarantee producers will receive a price that covers their production costs.

Back in 2017, the 8 million mt were auctioned with a BLR 500 million ($103.41 million) investment. 

The production increased 6.3 million mt from 2021/22 to 2022/23 in the state, from 43.8 million mt to 50.1 million mt, respectively.

In Mato Grosso state, Brazil’s agricultural powerhouse, the government established BRL43.26/per 60-kilo bag ($8.97) as the minimum price for the current crop, higher than average prices in the state at BRL35.29/bag ($7.32/mt) seen in June.

“That’s the amount we calculate will be necessary for government purchases to balance prices and we believe the government will intervene,” he said.

Gauer also said mechanisms of production disposal and premium payments to compensate for the difference between the minimum and the market value would be the most adequate modalities for the needs of the producer today.

On June 22, Brazil’s food agency Conab announced it will buy 500,000 mt of corn - of which 250,000 mt are expected to come from Mato Grosso -  to support domestic prices and build up public stocks, a move producers have not seen in the past six years. 

That would require a BLR 400 million investment. 

“Government acquisitions like this allow the recomposition of estate stocks and allow sales to happen in a better moment price-wise, however, 500,000 mt helps but is not enough,” Gauer said.

The corn and soybean producers’ association Aprosoja president, Antonio Galvan warned acquisitions announced must be made rapidly as well as the removal of the product from the state.

“Otherwise, our lack of storage issues will intensify,” Galvan warned.

Brazil is expected to harvest 312 million mt of beans and grains in 2023 while storage capacity is 194 million mt, a 118.5 million mt deficit.