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April 1, 2016

Brazil's Wheat Production could Increase in Spite of Lower Acreage

In their first evaluation of the 2016/17 Brazilian wheat crop, the consulting firm Trigo & Farinhas is estimating that the wheat acreage in Brazil will decline 9.5% to 2.21 million hectares compared to the 2.44 million hectares of wheat planted in 2015/16. In spite of the lower acreage, they are estimating that Brazil's wheat production will increase 14% in 2016/17 to 6.3 million tons due to improved yields and getter quality grain. Brazil produced 5.5 million tons of wheat in 2015/16.

The last two wheat crops in Brazil have been very disappointing due primarily to heavy rains during harvest that reduced yields and resulted in very poor quality grain. Much of the wheat produced during the last two years was of such poor quality that it could only be sold for animal rations. The resulting low prices for their wheat convinced many Brazilian farmers to reduce their wheat acreage even further in 2016/17 in favor of increasing their safrinha corn acreage.

With El Nino in decline, the weather for the winter wheat crop in southern Brazil is expected to be much better compared to the last two years. The ideal weather for the wheat crop would be adequate moisture during planting followed by a cool and dry winter and then relatively dry weather during harvest. With the forecast of more normal weather, Trigo & Farinhas is expecting the nationwide wheat yield to improve to 2,361 kg/ha (34.2 bu/ac) compared to last year's yield of 2,260 kg/ha (32.7 bu/ac). If those yields are achieved, Brazil's wheat crop would return to more long term normal yields.

Parana is the leading wheat producing state in Brazil and farmers in the state have already started to plant some of their wheat with the month of May being the primary month for planting wheat. Rio Grande do Sul is the second leading wheat producing state and the majority of the wheat in the state will be planted in May. These two states combined produce more than 90% of Brazil's wheat crop.