December 30, 2010

Wheat Acreage in Parana Could Decline in Favor of More Safrinha Corn

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

The one major agricultural product that Brazil needs to import on a consistent basis is wheat. Brazilian farmers have never been able to produce enough high quality wheat to meet internal demand. During the 2010 growing season, Brazilian farmers produced 5.8 million tons of wheat, but the country will need to import 5 million tons of additional wheat in 2010 to meet the domestic demand and estimates are that wheat imports might reach 6 million tons in 2011.

When Brazilian farmers were making planting decisions for the 2010 wheat crop, the drought in Russia had not yet started and as a result, wheat prices were much lower than they are today. In the state of Parana, the largest wheat producing state in Brazil, farmers planted 11% less wheat in 2010 (1.16 million hectares) compared to 2009.

In the state of Parana, wheat and safrinha corn compete for the same acres. safrinha corn is planted immediately after the early maturing soybeans are harvested. Wheat is generally planted a little later after the later maturing soybeans are harvested, but there can be some overlap between the two crops. Currently, corn prices are more attractive to Parana farmers than wheat prices and as a result, the Department of Rural Economics in Parana (Deral) is predicting that the 2011 wheat acreage in the state could decline another 100,000 hectares (approximately 10%) in favor of additional safrinha corn production.

If wheat production in Parana declines 10% in 2011, Brazil would need to increase its wheat imports approximately 6% in order to meet the domestic demand.