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November 26, 2012

Wheat Crop in Rio Grande do Sul Disappoints

Farmers in Rio Grande do Sul in southern Brazil are in the midst of harvesting their 2012 wheat crop. Early yield reports indicate that the statewide average yield is 23% lower than initial estimates. According to Emater/RS, the average wheat yield in the state is now estimated at 1,966 kg/ha, (approximately 30 bu/ac), which is significantly below the initial estimate of 2,562 kg/ha (approximately 39 bu/ac) earlier in the growing season. In 2011, the average wheat yield in the state was 2,941 kg/ha (approximately 45 bu/ac). In addition to low yields, the quality of this year's crop is also substandard. Emater/RS collected the yield data from surveys conducted across 281 municipalities in the state representing 90% of the wheat production in the state.

The wheat crop in the state ran into a series of adverse weather events during critical times during its development including: intense storms, strong winds, hail, late freezes, and periods of heavy precipitation. In addition to lower yields, much of the wheat being harvested in the state is of low quality and will be used as livestock feed instead of milling wheat.

Producing high quality wheat in Brazil is always a challenge and wheat is the only major crop in Brazil for which the country is not self-sufficient. Brazil generally only produces about half of the wheat needed to meet domestic demand. The other half is imported, with neighboring Argentina being the principal supplier. This year though, the wheat crop in Argentina is also disappointing and there are reports that Brazilian millers have already purchased wheat from Germany to fill the void. The high quality German wheat will be blended with the lower quality Brazilian wheat in order to meet the minimum standards for milling wheat.