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May 1, 2020

Brazilian Farmers Expected to Increase their Winter Wheat Acreage

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

Farmers in southern Brazil are starting to plant their 2020 winter wheat crop and they are expected to increase their wheat acreage due to attractive prices. If the weather cooperates, Brazil is expected to produce a larger wheat crop compared to 2019. The two principal wheat producing states in Brazil are Parana and Rio Grande do Sul and these two states account for more than 90% of Brazil's wheat production.

Parana is the largest wheat producing state and the Department of Rural Economics (Deral) reported this week that farmers in the state have planted 7% of their intended wheat acreage. Farmers in the state are expected to increase their wheat acreage 5% and Deral estimates that the state will produce 3.5 million tons of wheat.

Farmers in Rio Grande do Sul suffered a severe drought during the summer growing season resulting in soybean and corn yields down as much as 45% or more. Therefore, farmers in the state are hoping to increase their wheat production in order to recuperate some of their losses from the summer crops. But, the current dry weather in the state could delay the planting of the wheat. If the weather cooperates during the growing season, the state's wheat production is expected to increase 15% to 20%.

In Parana, farmers start planting wheat at the end of April and the planting should be complete by early June. The wheat in Parana is generally harvested in September and October and virtually all the wheat will be followed by soybeans.

In Rio Grande do Sul, farmers start planting wheat in May and the planting should be complete by the end of June. The wheat in Rio Grande do Sul is generally harvested in October and November and it too will be followed by soybeans.

Wheat production in Brazil can be problematic many times due to potential dry weather at the start of the growing season, potential frosts in the middle of the growing season, and potential excessive rains when the wheat is being harvested. As a result, Brazil never seems to be able to produce more than about half of its domestic needs. The remainder of the wheat is generally imported from Argentina and this year, Brazil is expected to import approximately 7 million tons of wheat.

With a stronger demand for wheat and a weakened Brazilian currency, domestic wheat prices in Brazil are attractive enough for farmers to increase their wheat acreage. This is a positive change compared to the last two growing season when wheat prices were low and yields were disappointing.