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July 25, 2019

Freeze results in Lower Wheat Production in Parana, Brazil

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

The Department of Rural Economics for the state of Parana (Deral) recently lowered their estimate of the 2019 wheat production in the state by 15.8% to 2.72 million tons according to a report by Reuters. This represents a reduction of 500,000 tons from their June estimate. The reason for the reduction was a severe frost that occurred several weeks ago across southern Brazil. This marks two years in a row that the wheat crop in Parana has been negatively impacted by a series of frosts.

Parana is the largest wheat producing state in Brazil responsible for producing more than half of Brazil's wheat crop. With lower yields now projected for Parana, Brazil will be forced to increase its wheat imports above the previously expected 7 million tons. Most of Brazil's imported wheat comes from neighboring Argentina, but Brazil has also eliminated the import tariff for a limited amount of wheat originating from outside of the Mercosul Trading Block. So, it is possible that the U.S. could export some wheat to Brazil in 2019/20.

One of the problems with wheat production in Brazil is the possibility of heavy rains when the wheat is ready for harvest. If these rains occur, they usually result in poorer quality wheat which can only be used for animal rations.

Virtually all the wheat in Parana will be followed by a crop of soybeans once the wheat is harvested. After the soybeans are harvested, the farmers in the state will once again plant wheat or more likely safrinha corn. In recent years, the wheat acreage has been declining in favor of increased safrinha corn acreage.