Mayor Ari Lafin of Sorriso, Brazil, the top global soybean and corn producer, disclosed plans on Monday to attract investments for the local grain crushing industry as he seeks to reinforce Sorriso's global agricultural standing.
Lafin, who presented Sorriso's economic potential to investors in Sao Paulo, engaged in talks with U.S.-based Cargill and China's COFCO. Further discussions with Bunge are scheduled, aiming to encourage the establishment of four new grain crushers in Sorriso, as per a report from Yahoo! Finance.
The official disclosed that during a 2018 delegation visit to China, Mayor Lafin discussed with COFCO. Lafin emphasized their goal was to convince companies to store and process products within Brazil. Despite COFCO having a crushing plant in Mato Grosso's Rondonopolis, Lafin noted their preference for processing soybeans in China.
(Photo : SERGIO LIMA/AFP via Getty Images) Agronomist Adriano Cruvinel supervises the soybean harvest at one of the plots of the Bom Jardim Lagoano farm in the municipality of Montividiu, Goias State, Brazil, on January 22, 2024.
Existing Crushing Plants
Sorriso currently houses a soy-crushing facility operated by Brazilian firm Caramuru and a plant owned by FS Bioenergia, which produces corn ethanol and other byproducts. Lafin hinted at potential investment from Cargill, stating the plan is under consideration given Cargill's existing crushing plant in Primavera do Leste.
For Bunge, Lafin aims to persuade them to establish a soy crushing unit in Sorriso, leveraging their substantial grain storage facility. He shared that Bunge initially planned a crushing unit in Sorriso, but the plan shifted to Nova Mutum.
Increase in Soybean and Corn Prices, Possible
Meanwhile in the United States, there are expectations of a spring rally in old-crop corn and soybean prices, with potential positive implications for Canadian grain and oilseed prices.
Ed Usset, a grain marketing economist at the University of Minnesota, indicated historical data suggests prices may exceed January highs, per The Western Producer.
In 16 of the last 20 years, corn prices declined from January peaks, while soybean prices surged beyond the January high in 17 of the last 20 years. Usset speculated on corn reaching $5 per bushel, emphasizing the uncertainty of the triggering factor. Farmers with unpriced corn or soybeans may find it beneficial to wait for potential spring price improvements.
Usset also expressed a long-term bullish outlook for grains and oilseeds, driven by the growing renewable diesel industry. The proposed establishment of 16 new soybean crush plants in the U.S. is expected to generate over 600 million bushels of annual demand, potentially causing market turmoil and improved prices.
Despite the potential for a bull market, Usset stressed the importance of a strategic marketing approach, recommending growers price 80% of their grain through pre- and post-harvest efforts, leveraging historical data indicating significant premiums over relying solely on harvest prices.
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