Brazilian Wheat Crop Set To Disappoint, Imports Increasing

The wheat harvest in Brazil looks set to disappoint this year, with production and quality both seen falling due to heavy rains. The same conditions have badly affected the sugar cane harvest, sending prices scurrying to multi-year highs.

The vast majority of Brazilian wheat is grown in the states of Parana and Rio Grande do Sul. In the former harvesting is around half done, whilst in RGdS cutting is only just getting underway.

Persistent heavy rainfall has fallen in both states across the last few months, as can be seen from this map for September:

Early season hopes that wheat output this season might be boosted by 50% to around 6 MMT appear to have been dashed. In Parana, which accounts for more than half of national output, estimates have been cut from 3.5 MMT earlier in the season to 2.7 MMT now. Whilst it is still too early to have an accurate assessment of production in RGdS, anecdotal reports suggest output of around 2.0-2.3 MMT.

With both states accounting for around 90% of national production, it looks like final output this year might only be around 5 MMT.

The rains have also hit quality hard, meaning that more high-grade bread-making wheat will have to be imported in 2009/10, That could push imports up by around 1 MMT in 2009/10 to somewhere in the region of 7 MMT.

With Argentina only set to produce little more than it consumes this year, that could open the door for US wheat to pick-up some much needed export interest, with Brazilian millers famously anti-Russian wheat.