September 28, 2012

Early Wheat Harvest in Brazil Indicates Good Quality

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

Farmers in Parana have already harvested approximately 40% of the 2012 wheat crop and thus far they have been pleased with the yield and the quality of the grain. Producing high quality wheat in southern Brazil is a challenge due to the potential for heavy rains during the harvest season that can result in poor quality grain. In many years the quality of the grain is so poor that it ends up as livestock feed instead of milling quality wheat. Due to reduced production in several of the major wheat producing countries in the world, domestic wheat prices in Brazil are quite favorable.

A strong cold front moved into the state this week bring freezing temperatures and even some light snow to the higher elevations of Santa Catarina and Rio Grande do Sul. Any potential damage to the wheat crop in southern Brazil is yet to be determined.

Farmers in Parana cut back on the wheat acreage in 2012 in favor of producing additional safrinhai corn. As a result, wheat production in Parana is expected to decline 15% to 2.1 million tons. The total wheat crop in Brazil is expected to decline 10% to 5.2 million tons.

The demand for wheat always exceeds the domestic supply in Brazil and wheat is the only major crop for which Brazil is not self-sufficient. Domestic demand for wheat is expected to be approximately 11 million tons. Even though Brazil is a deficit wheat producing country, some of its domestically produced wheat is exported at the beginning of the marketing year forcing wheat to be imported later in the marketing year. Total wheat imports into Brazil are expected to be approximately 7 million tons during the current marketing year.