Nov 03, 2016

Parana Wheat 81% Harvested, Rio Grande do Sul slowed by Rain

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

The state of Parana is Brazil's largest wheat producing state and the Department of Rural Economics (Deral) estimates that farmers in the state have harvested 81% of their 2016 wheat crop compared to 85% last year at this time.

In important production areas such as Campo Mourao, Cascavel, and Cornelio Procopio in the western part of the state, the harvest is essentially complete. The harvest is less advanced in the eastern regions of the state where the crop was planted later.

The wheat that has been harvest is of good quality and the farmers have sold approximately 50% of their production. Farmers are slow sellers due to the declining domestic prices. Harvest pressure and declining international prices have resulted in significant declines in domestic wheat prices. From September to October, the spot price for wheat in Parana declined 10.4% while it declined 14% in Sao Paulo and 14.4% in Rio Grande do Sul.

Farmers are also slow sellers because they are waiting for the federal government to intervene in the market to support prices. The Brazilian Minister of Agriculture has indicated that the government intends to conduct a series of auctions where the government will purchase wheat from producers at the guaranteed minimum price set by the government.

Even with low prices for wheat, millers in Brazil are having difficulty selling their products due to the poor economic situation of the Brazilian economy where 12 million Brazilians are unemployed and the government is slashing public spending.

Rio Grande do Sul is the second largest wheat producing state in Brazil and the wheat harvest in the state has been delayed by persistent heavy rains. The wheat harvest in the state is estimated at 15% and there are growing concerns that the wet weather will result in lower production and poor quality grain. Estimates are that loses could be as high as 30% due to the wet weather and much of the wheat in the state may only be feed quality.

This marks three years in a row that heavy rains during harvest have significantly impacted the wheat crop in Rio Grande do Sul. The states of Parana and Rio Grande do Sul produce more than 90% of Brazil's total wheat production.