Brazilian farmers run out of crops storage

Source:Reuters-Global Times Published: 2017/8/17 18:38:40

Harvesters reluctant to sell, await price rebounds after record outputs

From Iowa to China, years of bumper crops and low prices have overwhelmed storage capacity for corn, wheat and other basic foodstuffs.

And the situation is dragging down farmer incomes, especially in Brazil.

Brazil, the world's biggest soybean exporter and the No.2 corn exporter after the US, is seeing these stockpiles on second corn, which historically has been an afterthought.

Brazil's second corn is a crop once planted as a cheap way of resting the soil from soybeans.

This year's harvest of second corn in Brazil has been so big, and prices so low, that farmers have had no choice but to leave supplies to pile up in storage.

In Mato Grosso, a large Brazilian state, the massive harvest made farmers' options for permanent storage even more limited, as part of the record soybean output still sits in silos while producers wait for prices to rebound.

The pileup underscores a lack of preparation for these massive harvests in Latin America's largest economy, where chronic logistical bottlenecks have been worsened by farmers' refusal to sell amid slumping prices, with far-reaching effects.

Brazil's stockpiles are exacerbated by the extra corn crop its climate allows, which is set to reach a record 66.6 million tons this year.

Growers say the grain stocks may still be there when the next soy harvest arrives in January, while carryover volumes for both commodities will end the crop season at a record high.

The pattern of soy hoarding has been repeated across Brazil, pushing local soybean prices down about 23 percent from 69 reais ($22) a bag in August 2016, according to Mato Grosso's agricultural research institute Imea.

"I would sell my soybeans if prices reached 62 reais a bag,"  said Cayron Giacomelli, a farmer from Mato Grosso.

There were bids at 55 reais locally and he still has 15 percent to 20 percent of the soybeans tucked away.

Farmers' reluctance to sell crimped margins for Archer Daniels Midland and Bunge Ltd last quarter as the grain traders had to pay more than they expected for soybean supplies to meet commitments.

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