Sep 22, 2017

Brazil Wheat Crop may Disappoint in both Yield and Price

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

According to a report from the Agricultural Center for Socioeconomic Planning (EPAGRI/CEPA) in the state of Santa Catarina in southern Brazil, 8% of the wheat crop in the state is flowering and entering into grain filling. This is slower than the normal development of wheat in the state.

The consulting group Trigo & Farinhas, accredits the slow development of the wheat crop to dry weather earlier in May and June that delayed the planting of the wheat. The dry start to the wheat growing season continued as the crop entered vegetative development resulting in an uneven development of the crop and the inability of farmers to top dress the crop with nitrogen. This has resulted in a yellowish looking crop with a probably diminished yield potential.

The state of Parana is the largest wheat producing state in Brazil and according to the Department of Rural Economics (Deral), 16% of the state's wheat crop had been harvested by the end of the first week of September, which is a normal harvest pace for the state. The wheat yields in Parana are expected to be disappointing due to frosts/freezes earlier in the growing season.

Rio Grande do Sul is the second largest wheat producing state in Brazil and the early wheat harvest in the state is expected to begin at the end of September. Adverse weather during the growing season has impacted the wheat crop in Rio Grande do Sul resulting in a lot of weed and disease pressures. Farmers in the state are expecting the wheat yields to be less than what had been anticipated earlier in the growing season.

In all three of these states, all of the harvested wheat areas will be followed by a second crop of soybeans.

In addition to potentially low yields, domestic wheat prices in Brazil are low as well. The wheat price in Parana during the last week of August was R$ 35.00 per sack (approximately $5.13 per bushel). In Rio Grande do Sul the wheat price in August was R$ 32.00 per sack (approximately $4.70 per bushel). The wheat prices in Santa Catarina during August were 17% lower compared to August of 2016.