Aug 09, 2017

Brazilian Wheat Crop Disappoints, Brazil to Import 7 mt of Wheat

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

The winter wheat crop in South America is turning out to be a big disappointment. The combination of lower acreage and adverse weather has taken a toll on the crop.

According to a recently released bulletin by the trading firm Zeni, the 2017 wheat acreage in the state of Parana is down 10% from last year to 977,800 hectares. In the state of Rio Grande do Sul, the wheat acreage is also down 10% to 699,000 hectares. In the state of Minas Gerais, there was a small increase in wheat acreage to 84,700 hectares.

The wheat crop in southern Brazil has also been adversely impacted by freezing temperatures. Near record cold temperatures earlier in the growing season impacted the earlier planted wheat in western Parana because it was in a sensitive stage of development when the cold temperatures hit. The wheat crop in Rio Grande do Sul was not far enough along in its development to be hurt by the cold temperatures, but dry weather across the state has impacted the crop.

Zeni estimates that the 2017 Brazilian wheat crop will be 5.58 million tons compared to 6.73 million tons produced in 2016. In addition to the lower yields, the Brazilian wheat crop could also have some quality issues as well. The Brazilian domestic wheat demand is estimated at 11.69 million tons or 3.3% more than last year. As a result, Brazil is expected to import as much as 7 million tons of wheat this coming year.

The vast majority of Brazil's wheat imports come from Argentina and Paraguay, but Paraguay has its own problems with the wheat crop this year. In neighboring Paraguay, the 2017 wheat crop was even more impacted by the record cold temperatures. In a worst case scenario, the Paraguayan wheat crop may suffer loses as high as 50%. If that turns out to be the case, then the 2017 wheat crop may only be enough to cover the basic domestic demand and in fact, Paraguay may have to import higher quality wheat to meet the demand.