May 17, 2017

Wheat Acreage in Rio Grande do Sul to Decline

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

Wheat farmers in the southern Brazilian state of Rio Grande do Sul, which is Brazil's second largest wheat producing state, are not happy about the low wheat prices, but many are sticking with wheat production because it fits into their cropping system. In their May report, Conab estimated that wheat acreage in the state would decline 10% in 2017, but local analysts do not think it will decline that much. Conab is estimating the 2017 wheat acreage in the state at 699,200 hectares compared to 776,900 hectares in 2016.

According to the president of FecoAgro/RS, he feels the acreage will be down, but by a smaller amount. He is a little more optimistic due to the current low soybean prices and the desire by farmers to try and make up the difference by producing a good wheat crop.

Additionally, for most farmers in the state, there is no good economic alternative to winter wheat production and wheat offers agronomic advantages as well. One of the advantages of wheat production is that it keeps the rolling hills of the state covered with vegetation reducing erosion and providing residue for the next soybean crop, which helps to conserve soil moisture. Wheat also helps to control problem weeds, it spreads out costs over the year, it makes better use of labor and machinery, and it helps to maintain soil fertility.

The 2016 wheat crop in the state was quite good, but farmers had problems selling the wheat for a profit. To help avoid that in 2017, Brazilian researchers are emphasizing to farmers that they need to carefully select the wheat varieties best suited for their region. There are 66 wheat varieties available in the state, but Embrapa researchers are encouraging farmers to limit their selection to 10 or 12 options each year. They should strive to produce the best quality wheat because good quality wheat can be sold for 8-20% above the average market price.

Farmers in the state have no illusions about their 2017 wheat crop. It is going to be a challenging year given the low prices for wheat and the higher cost of production due to the stronger Brazilian currency compared to last year.

The winter wheat crop in Rio Grande do Sul is generally planted from mid-May to mid-July and it is harvested from early November to early December. Virtually all the wheat in the state is followed by a second crop of soybeans.