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October 9, 2015

Wheat Harvest begins in Rio Grande do Sul, Wetness Worries Persist

The early wheat harvest is getting underway in the state of Rio Grande do Sul in southern Brazil and producers are worried that they may have another disappointing wheat crop due to adverse weather. The wheat crop in the state has already suffered from freezing temperatures earlier in September when 60% of the wheat was filling grain, hail and strong winds after the cold temperatures departed, and now persistent heavy rains as the crop approaches maturity.

The wheat crop in the state is approximately 2% harvested with another 11% of the crop mature and waiting to be harvested when dryer weather returns. Unfortunately, the forecast is for more heavy rains to persist in the state for several more days. Early harvest results indicate average yields and good seed quality, but agronomist are reporting that the wheat now being harvested was planted early enough to escape the damage caused by the freezing temperatures. The later planted wheat is expected to be much more impacted by the adverse weather.

Conab will release its latest assessment of the Brazilian wheat crop on Friday, October 9th, but many private analysts have already reduced their production estimates by at least 10% and they are warning that the grain quality may be poor. The consulting group Wheat & Flour recently estimated that as much as 1.6 million tons of Brazilian wheat may end up as feed wheat due to poor quality. If that turns out to be the case, it would represent approximately 25% of the estimated 6.5 million tons of wheat expected to be produced in 2015.

Feed quality wheat in Brazil is usually destined for the export market and prices this year are relatively good for feed wheat thanks to the devalued Brazilian currency. In fact, the price for feed wheat may be equal to or slightly better than the prices being offered for better quality wheat used in the domestic market. This would certainly be good news for producers who would not lose money due to the poorer quality.