Oct 21, 2015
Brazil's Wheat Crop Disappoints for two Years in a Row
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The 2015 Brazilian wheat crop is destined to be another disappointment due to a late season frost and continued heavy rains in the state of Rio Grande do Sul as farmers try to harvest the crop. In their most recent assessment of the Brazilian wheat crop, Conab is estimating the production at 6.6 million tons, which is down from the 7.07 million tons estimated a month earlier.
The state of Parana is the leading wheat producing state in Brazil and the wheat harvest in the state is nearly complete. Production estimates in the state were reduced 10% to 3.6 million tons due to adverse weather earlier in the growing season.
Rio Grande do Sul is second leading wheat producing state but a late season frost earlier in September when the wheat was flowering lowered the wheat crop by 500,000 tons and now persistent wet weather as farmers try to harvest the crop is expected to reduce the yields even more. Conab is estimating the state's production at 2.2 million tons, but many observers consider that optimistic. Not only are the heavy rains reducing the yield, the quality of the crop is also being impacted. It's possible that up to 50% of the wheat in the state will only be suited for animal feed.
Brazil only produces about half of its wheat needs relying on imports from its neighbors to fill the void. Most of their imported wheat comes from Argentina where 11% of the wheat has been harvested. The USDA is estimating that the wheat acreage in Argentina at 3.5 million hectares, which is down from last year's 4.2 million hectares. They are estimating the Argentine wheat production at 10.5 million tons down from 12.5 million tons produced last year and that Argentina will export 5 million tons of wheat.
The USDA is estimating that Brazil will import 6.7 million tons of wheat, but that figure may end up being low due to the expected poor quality of Brazil's wheat. If the quality of the wheat turns out as bad as expected, then Brazil's neighboring countries will not produce enough wheat to meet its import needs forcing Brazil to look to North America for several million tons of additional high quality wheat imports.
In addition to Argentina, Brazil imports a small amount of its wheat from neighboring Paraguay. The consulting group Wheat & Flour is reporting that the wheat harvest in Paraguay is complete and that the 610,000 hectares of wheat is expected to produce 1.18 million tons.