July 23, 2015

Rains in Rio Grande do Sul impeding Wheat Planting

The heavy rains that have fallen across Rio Grande do Sul in recent days have farmers concerned about their developing wheat crop. Rio Grande do Sul is expected to plant 920,000 hectares of wheat, which would be approximately 20% less than last year, but 20% of the crop has not been planted due to wet weather.

The ideal planting window for wheat in Rio Grande do Sul has already passed and the forecast is calling for more wet weather in the near term, so it is possible that not all the intended wheat acreage in the state will be planted. Rio Grande do Sul is the second leading wheat producing state in Brazil after Parana and combined, these two states produce more than 90% of Brazil's wheat crop.

Farmers in Parana have planted nearly all their intended 1.32 million hectares of wheat, which is 5% less than last year's crop. Thus far, the wheat in Parana is rated 90% in good condition, 9% in average condition, and 1% in poor condition.

Heavy rainfall has also been common in Parana over the last few weeks and some farmers have not been able to apply additional fertilizers or weed control. Additionally, they are worried about the potential for higher disease pressure and the lack of sunshine. If the weather would return to more normal levels over the next few months, then the wheat crop could still maintain an average yield potential.

More long term, the concern in southern Brazil is that the current strong El Nino will result in heavier than normal rainfall in September-October-November when the wheat is being harvested. If that turns out to be the case, it would be two disappointing wheat crops in a row for farmers in southern Brazil. In 2014, the wheat crop in Rio Grande do Sul declined by 42% due to wet weather at the time of harvest and the crop in Parana declined by 10% for the same reason.

Brazil only producers about half of its domestic wheat demand with the remainder imported primarily from neighboring Argentina.