August 1, 2013

Freezing Temps Reduces Parana Wheat Crop by 20% to 30%

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Agronomists and state officials in Parana in southern Brazil continue to assess the damage to the state's wheat crop from four consecutive nights of freezing temperatures last week. It was the most intense cold snap in the state since the year 2000 with some areas of the state recording temperatures in the low 20's.

It is estimated that 50% of the wheat in the state was at a vulnerable stage when the cold temperatures swept into the state. An estimated 320,000 hectares of wheat experienced the coldest temperatures and another 170,000 experienced moderately cold temperatures (total wheat acreage in Parana is estimated at 914,000 hectares). The greatest losses will be the wheat that was expected to be harvested in August and September

Before the cold snap, the State Secretary of Agriculture had estimated that 79% of the wheat in the state was in good condition with 4% in poor condition. After the frost, they now estimate that 47% in good condition and 18% in poor condition.

Statewide losses are estimated at 20% to 30%, but the final tally won't be known for several more weeks. The state had been expected to produce 2.7 million tons of wheat (about half Brazil's total), but that should decline by at least 500,000 tons. Brazil is a major importer of wheat and Conab had estimated that Brazil would import approximately 7 million tons of wheat, but that figure may now be closer to 8 million tons.

Further damage to the wheat crop could still occur. The National Meteorological Institute does not expect a return of cold temperatures over the next two weeks, but they have not ruled out another intense cold snap in September. Even though the later developing wheat escaped damage this time around, additional loses may be in the offing if heavy rains occur during the harvest of the later maturing wheat in October.

Wheat millers will need to import more wheat from the U.S. and Canada since their traditional supplier, which is Argentina, also has short supplies and the Argentine government has limited further wheat exports. Imports have become more expensive in recent months due to a weakening of the Brazilian currency and most market observers believe the currency will continue to weaken for the remainder of 2013 and into 2014.