Aug 02, 2021

Winter Wheat in Brazil Negatively Impacted by Recent Frosts

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

Parana Wheat - Farmers in the state of Parana increased their winter wheat acreage 5% this year to take advantage of the strong wheat prices. Most of the wheat in the state is planted in the southernmost region of the state which has endured three waves of freezing temperatures over the past month.

When the first wave of frost hit at the end of June, the wheat was not at a sensitive stage, so there was probably little damage. When the second round of frosts occurred on July 19/20, the heads had emerged on approximately 1% of the wheat, so some damage probably occurred. When the third round of frosts occurred last week, heads had emerged on approximately 27% of the wheat, so agronomists are expecting damage since wheat at that stage is very sensitive to frost.

The extent of the damage will not be known until grain filling starts. Some of the most advanced wheat may be a complete loss due to the repeated frosts. At the start of the growing season, the Department of Rural Economics (Deral) estimated that the state would produce 3.9 million tons of wheat, but that estimate is expected to decline due to the damage caused by the frosts.

Sao Paulo Wheat - Agronomists in the state of Sao Paulo are also expecting lower wheat yields due to a series of strong frosts during July. Farmers increased their wheat acreage this year and before the frosts, the state was expected to produce a record large crop, but that will probably not occur. It will take several weeks to determine the extent of the damage, but wheat yields in the state will be significantly reduced and there may be poorer quality wheat as well.

Wheat Substituted for Corn in Animal Rations - Wheat is often used as a substitute for corn in animal rations when corn becomes too expensive or is not available in the market. In normal times, that could happen to a limited degree in Brazil as well, but these are not normal times. Drought and frosts have resulted in significant losses for the safrinha corn and record high domestic corn prices. The recent frosts have now negatively impacted the wheat production as well, so wheat supplies may also be limited.

Brazil's Wheat Imports May Increase - Brazil must always import about half of its domestic wheat needs, but after the recent frosts, they may need to import more wheat than normal. Additionally, there will be pressure in the market to limit the amount of wheat that could be used for animal rations because the wheat millers will be short on wheat supplies.

The losers in this scenario will be livestock producers in southern Brazil that are already importing corn from Argentina and Paraguay to keep their operations running and now there will be limited wheat available to substitute for the corn.