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March 10, 2015

Wheat Acreage in Parana to remain Unchanged in 2015

Even though the price of wheat has declined 26% in Parana over the last twelve months, farmers in the state are expected to maintain the same wheat acreage as last year. The state of Parana is generally the largest wheat producing state in Brazil and along with the state of Rio Grande do Sul, these two states produce more than 90% of the wheat grown in Brazil.

Their motivation for planting wheat isn't so much the fact that they think wheat is the best option, but rather the fact that the soybean harvest is being delayed and that in turn, delays the planting of the safrinha corn crop. Hot and dry conditions last October in northern Parana delayed the soybean planting approximately three weeks and that is the region where most of the safrinha corn is planted. Winter wheat and safrinha corn compete for the same acreage especially in northern Parana.

The ideal planting window for safrinha corn in northern Parana closed several weeks ago and latest any corn can be planted in the state is approximately mid-March. Corn planted after that date runs a very high risk of cold temperatures impacting the crop before the grain filling process is complete. Therefore, if safrinha corn cannot be planted in a timely manner, the next best option is to plant winter wheat in April or May.

The Secretary of Agriculture for the state of Parana is estimating that the state will produce 4.1 million tons of wheat in 2015, which would be 300,000 tons more than last year's frost-impacted crop.

Wheat stocks in the state are high, farmers are still holding 900,000 tons from last year's 3.8 million ton production. As a result, the domestic price of wheat in the state is below the minimum price guaranteed by the government. Farmers are hoping that the federal government will conduct auctions similar to last year where they will insure that farmers will receive the minimum price for wheat guaranteed by the government.

During the last four growing seasons, the price of wheat in the state stayed above the minimum price due to higher international wheat prices even though the wheat production in the state was much lower.