Aug 03, 2020

Brazilian Farmers may produce a Record Large Wheat Crop in 2020

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

The 2020 Brazilian wheat crop could set a new record high production according to the consulting firm Trigo & Farinhas. They are estimating the 2020 Brazilian wheat production at 7.34 million tons, which is one million tons higher than the 6.31 million tons currently estimated by Conab. The prior record was set in 1987 when Brazil produced 6.13 million tons.

Domestic wheat prices are very good in Brazil thanks to the devalued Brazilian currency and farmers came out of their 2019/20 soybean growing season well capitalized due to record high domestic soybean prices. As a result, they used some of those soybean profits to invest heavily in their 2020 wheat production.

The weather thus far has generally been beneficial and there has not been any significant outbreaks of diseases or pests. One of the recurring problems for Brazilian wheat producers is the potential for heavy rains during harvest that can reduce yields and lower the quality of the wheat.

The state of Parana is the largest wheat producing state in Brazil and the wheat harvest in the state will start in August and intensify in September. The state of Rio Grande do Sul is the second largest producer and the wheat harvest in that state will start in October and intensify in November.

The Department of Rural Economics for the State of Parana (Deral) is estimating that the state will produce 3.68 million tons of wheat, which is a 72% increase compared to last year. The coordinator of the Wheat Commission of the Agricultural Federation of Rio Grande do Sul (Farsul) confirmed that the weather has been good for wheat development, but he feels that it is too early to make any accurate predictions concerning the potential wheat production in the state.

Domestic demand for wheat in Brazil is approximately 12.5 million tons so the deficient must be made up with imports primarily from neighboring Argentina. Last year, Brazil produced 5.7 million tons of wheat and imported 7.3 million tons. The amount of wheat that Brazil will need to import in 2020 might be closer to 6 million tons if the crop does not run into any significant weather problems going forward.