SAO PAULO (DTN) -- News that Brazilian farmers are selling large lots of their next winter corn crop for export, even before the summer planting season starts, underlines the growing stature of the grain here.

With corn prices soaring as the U.S. crop suffers, Brazilian farmers jumped at the opportunity to presell their second crop, locking in prices and input costs.

According to Otavio Celidonio, superintendent of the Mato Grosso Agriculture and Ranching Economy Institute (IMEA), around 30% of the state's winter crop has already been sold.

"We have seen forward sales for corn before, but never on this scale and never this early," he said.

Brazil has seen significant improvements in corn yields during the past five years following the introduction of genetically-engineered seed. Now it appears that corn marketing and logistics also are advancing, although they remain rudimentary compared with marketing plans for soybeans.

Forward sales are common in the soybean market. Farmers typically sell more than half their soybean crop before harvest to raise working capital and lock in prices.

This year, soybean forward sales were closed very early. With most of their summer soybean crop costs covered by July, Mato Grosso farmers decided to seize high corn prices and guarantee winter crop margins, too.

Prices are outstandingly attractive this year. In Sorriso, northern Mato Grosso, corn is currently fetching R$17.70 per 60 kilogram bag ($4.57 per bushel), up 77% on the year before.

Mato Grosso farmers plant very little summer corn. Instead, farmers plant directly after the soybean harvest in January and February. Next year, the state expects to produce around 9 million metric tons, or 40% of Brazilian winter production, although much depends on farmers' ability to harvest soy and plant corn before the planting window closes at the end of February.

Other states, most notably Goias and Parana, also have registered some forward sales, although total commitments probably don't top 20% of the forecast Brazilian crop, said one Sao Paulo-based trader.

Brazil has become a regular corn exporter. This year, the Agriculture Ministry pegs shipments at 8.5 mmt to 9 mmt; shipments would have been higher were it not for frost and drought losses and surging domestic demand.

Next year, exports may grow along with output, which is seen rising as much as 7% to 60 mmt.

Forward sales were a key component in the expansion of Brazilian soybean production over the past 15 years. A vibrant corn forward sales market could reasonably be expected to bolster production of that grain in a similar way.

(GH/ES/CZ)

© Copyright 2011 DTN/The Progressive Farmer, A Telvent Brand. All rights reserved.