Brazil bumper crops spark surge in grain bags

SAO PAULO, June 14 (Reuters) – Brazilian farmers are resorting to grain storage bags as they seek a quick-fix, low-cost solution to store their bumper crops of soybeans and corn.

This season an unprecedented volume of crops will be stored in such 180-tonne bags, as permanent structures like silos cannot be financed and built on short notice.

Brazil’s silo bag grain storage could reach between 15 million and 20 million tonnes, a 30 percent rise from two years ago, according to estimates from Ipesa do Brasil, a leading manufacturer of the bags that are each 60 meters (200 feet) long.

Brazil’s total grain crop is seen at a record 234.3 million tonnes, 25.6 percent more than in the previous season.

Grain output in the South American country adds to a global glut that is driving prices lower and pressuring profit margins for farmers and commodities traders worldwide.

A record 80,000 silo bags, made of polyethylene, were sold in the country this year, said André Pessôa, partner at consultancy Agroconsult.

Under the right conditions, the bags can store grains for six months to a year, Pessôa said.

Producers tend to hold onto soybeans more than corn when prices are low, said Jose Sismeiro, president of industry group Aprosoja in Paraná. But a decision of whether to hoard soy hinges on each farmer, who has to finance the next crop and may be unable to wait, he said.

“The producer, who has the two things, will sell the corn and keep the soy,” Pessôa said.

Demand for the bags is driven by the winter corn crop, Ipesa said, adding farmers are also moving soybeans from permanent silos to the bags to make room for the new corn.

The use of alternative storage systems underscores a historical storage gap in states like Mato Grosso, Brazil’s largest soy and corn producer.

The deficit, in addition to delays in soybean sales due to low prices, is an issue as the new corn is harvested, said Wellington Andrade, director at Aprosoja’s Mato Grosso branch.

So far five percent of Mato Grosso’s winter corn has been harvested while producers have yet to sell 22 percent of this season’s soybeans.

“The storage problem would be worse without the government’s corn auctions helping to ship it out of the state,” Andrade said.

Mato Grosso’s grain storage gap is estimated at 35 million tonnes. This season, the state is expected to harvest 59 million tonnes of soy and corn.

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