May 10, 2013
Wheat Planting off to Slow Start in Southern Brazil, Prices Improve
Farmers in Parana are in the process of planting their winter wheat crop, but dry weather has resulted in a slower planting pace than last year especially in the state of Parana. According to the State Secretary of Agriculture, approximately one third of the wheat has been planted compared to 40% last year at this time. The wheat acreage in Parana is expected to increase 9% to 855,000 hectares and the total production is estimated at 2.56 million tons.
The dryer areas of the state received scattered showers last weekend, but not everyone received enough rainfall to insure uniform germination. Additional precipitation is expected in southern Brazil in the coming days which could help accelerate the planting progress. The planting window for wheat in the state is quite large and in the southern Parana, the wheat can be planted all the way into the month of July.
Winter wheat acreage in Brazil has been declining in recent years due to increased interest in safrinha corn production, but strong domestic wheat prices are expected to attract additional wheat acres once again. Conab is estimating that the Brazilian wheat acreage will increase 5.9% in 2013/14 to 2.0 million hectares compared to 1.89 million hectares planted in 2012/13.
The state of Parana is expected to plant 855,000 hectares of wheat and Rio Grande do Sul is expected to plant 1,010,400 hectares. If realized, these two states combined will plant 93% of Brazil's total wheat crop. With normal weather, Conab is expecting Brazil's 2013/14 wheat crop to be 5.14 million tons or 19.6% more than the 2012/13 crop. In addition to strong wheat prices, new wheat varieties that are higher yielding and more disease resistant are also encouraging farmers in southern Brazil to plant more wheat.
Current domestic wheat prices in Parana are very good and in some regions they are 50% higher than last year at this time. In western Parana, wheat is currently being sold at R$ 42.50 per sack of 60 kilograms or approximately US$ 9.60 a bushel. The new crop is being forward contracted at prices in the range of R$ 33 to R$ 37 per sack or US$ 7.50 to 8.40 per bushel.
Wheat is the only major crop for which Brazil is not self-sufficient. Therefore, Brazil needs to import more than half of its domestic wheat needs with most of the imports coming from neighboring Argentina. Due to a disappointing 2012/13 wheat crop in Argentina, Brazil was forced to import wheat from non-Mercosul countries in 2012/13 at higher prices. Conab estimated that Brazil imported 7.2 million tons of wheat in 2012/13, but that is expected to decline to 6.8 million tons in 2013/14.