Aug 23, 2010
Early Wheat Harvest Starts in Parana, Prices Remain Depressed
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
According to the Department of Rural Economics, the farmers in Parana have harvested 2% of their 2010 wheat crop. In some of the most advanced regions, 10% of the crop has been harvested. Overall yields are expected to be good even though cold weather and frosts did affect the crop in the southern regions of the state. Certainly this crop will be better than the 2009 crop that was negatively impacted by dry weather.
Wheat acreage in the state declined 15% in 2010 from 1.311 million hectares planted in 2009 to 1.145 million planted in 2010. Conab is estimating that the state's total wheat production will be 3.068 million tons, which if realized, would be 15% greater than the 2.67 million tons produced in 2009.
Even though production will be up from last year, the domestic wheat prices in the state continue to languish and they are not expected to improve until sometime in September. The domestic wheat prices in Brazil are quite different than in the international market. Domestic wheat prices reached their peak of R$ 40.98 per sack in May of 2008 and they have been falling ever since. The price of wheat this month in Parana is approximately R$ 22.18 per sack, which is 45% lower than May of 2008.
Officials from Conab explained that the disconnect between the domestic prices and international prices is due to the abundant supply of wheat domestically. Thus far in 2010, Brazil has imported 500,000 tons more of wheat compared to 2009. As of July 31st, there were a total of 10.4 million tons of wheat in Brazil of which 1.2 million tons were in the hands of the government. The total domestic consumption per year in Brazil is approximately 10 million tons. Of that total, 9.3 million tons are milled for flower and the remainder is used in animal rations.
Domestic wheat prices are expected to increase in September and market analysts are advising their farmer clients to be patient in making wheat sales.