November 11, 2015

Wheat Disappoints in Rio Grande do Sul - Low Yields, Poor Quality

The wheat crop in Rio Grande do Sul is approximately 50% harvested with 36% of the remaining crop mature and 14% still filling grain. The yields reported thus far are in the range of 1,200 to 2,400 kg/ha or 17.4 to 34.8 bu/ac and the quality of the grain is average to poor. This marks two years in a row of very disappoint wheat crops in the state.

The wheat crop in Parana is 88% harvested compared to the five-year average of 83%. Of the remaining wheat in the field in Parana, 49% is rated average and 16% is rated poor. Officials from the State Secretary of Agriculture had earlier estimated that the state would produce 3.5 million tons of wheat, but they now feel the crop will fall short of those estimates.

Domestic wheat prices are also below expectations because the millers have little interest in purchasing the domestic wheat due to the poor quality of the grain. Heavy rains over the last several months due to El Nino have led to the low yields and poor quality. In their November Crop Report, Conab lowered their estimate for the 2015 Brazilian wheat crop to 6.2 million tons, which is down from the 6.6 million tons they estimated in October. As a result, it is expected that Brazil will be forced to import 6 million tons of wheat or more to meet domestic demand.

This makes two years in a row of very disappointing wheat crops in Rio Grande do Sul and it is expected that producers will reduce their wheat acreage significantly in 2016. If that turns out to be the case, then Brazilian wheat imports should increase again in 2016.