May 19, 2016 / 2:53 PM / 2 years ago

UPDATE 1-Dry weather, firm prices induce early Brazil winter corn harvest -tour

(Adds quotes, details from visits during tour)

By Roberto Samora

IPIRANGA DO NORTE, Brazil, May 19 (Reuters) - Producers in isolated parts of Brazil’s main grain state of Mato Grosso started harvesting the winter corn crop earlier than expected to take advantage of near record prices, as the drought that has curtailed yields also accelerated the crop’s maturation.

Reports of winter corn harvesting are still isolated in the center-west state of Mato Grosso, according to agronomists on the Rally da Safra crop tour in which Reuters is embedded on Thursday.

Farmers are already running harvesters through their fields even though moisture levels in the second corn crop are not yet ideal, in order to capture strong demand from the local animal feeds industry in the region.

Corn currently being harvested in the region is registering moisture levels above 14 percent, which is the standard for buyers to accept delivery without price discounts.

Spot corn prices in the region are so attractive that, if producers do not own drying equipment on site, they are paying 2 reais to 3 reais per 60-kg bag for the service, in order to sell as much of their crop before harvest gets into full swing and drives down prices.

The price of corn in Brazil more than compensates the producer for early harvest. A 60-kg bag of corn is quoted at 40 reais ($11.11) in the state, up from 15 reais a year ago, according to Mato Grosso’s farm economics institute Imea.

“At this price, (the producer) is motivated. The price covers the drying costs,” agronomist Fabio Carneiro at analyst Agroconsult that is hosting the Rally da Safra crop tour that passed through Ipiranga do Norte and Tapurah on Wednesday in the mid-north of Mato Grosso, where 45 percent of the state’s winter corn is grown.

The region has a thriving poultry and pork industry, which is the main driver of demand for corn in Brazil. The neighboring township of Lucas do Rio Verde is home to a large poultry plant of BRF SA, the world’s largest poultry exporter.

But producers told members of the tour that roughly two-thirds of the region’s expected corn output had been sold forward earlier in the year at prices lower than current spot market levels. This will limit the practice of harvesting corn before it is fully dry in the field, they say.

The lack of rain that caused losses to the crop helped drive prices to record levels, as did record exports of the grain between July and March when the weak real to the dollar motivated sales abroad in dollars. (Writing by Reese Ewing; Editing by Chizu Nomiyama and Alistair Bell)

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