Jun 01, 2023

Freight Rates Soar in Mato Grosso with Start of Corn Harvest

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

Mato Grosso is Brazil's largest corn producing state and farmers in the state had harvested 0.49% of the safrinha corn as of late last week compared to 2.3% last year and 0.54% average. The state is expected to produce a record corn crop in 2022/23 which will put upward pressure on freight rates to move the crop to export facilities.

According to the Mato Grosso Institute of Agricultural Economics (Imea), the cost to transport corn by truck during the third week of May from the city of Sorriso in central Mato Grosso to the Port of Santos in southeastern Brazil was R$ 446.57 per ton or approximately $2.45 per bushel. This was up 7% compared to a month earlier and the cost could increase even more once the harvest pace accelerates during June. These higher freight rates are squeezing profit margins for farmers especially now that corn prices have declined significantly since the start of the year.

Approximately 60% of the gain in Mato Grosso moves by truck to export facilities, which is the most expensive mode of transportation. The problem for farmers in Mato Grosso is the long distances to Brazilian ports. For example, it is approximately 2,000 kilometers from Sorriso to Brazil's largest port of Santos.

Another problem for farmers in the state is the lack of storage space. Farmers have been slow sellers of their 2022/23 soybean production due to low prices, so much of the storage space is still occupied by soybeans. The lack of storage space may force farmers to sell more of their corn out of the field.

Nationwide, the safrinha corn in Brazil was 0.8% harvested as of late last week compared to 1.2% last year.