Brazilian wheat growers focus on the harvesting and the weather, lowering liquidity

Cepea, October 17 2019 – The trading pace for wheat was slow in the Brazilian market in the first fortnight of October. In general, sellers were focused on the harvesting in Paraná (PR) and in Rio Grande do Sul (RS) States, as well as on the weather in Brazil, Argentina and the United States. The gap between asking and bidding prices was influencing the low liquidity scenario.


In the field, wheat harvesting had reached 76% of the area in PR until October 7, according to Deral/Seab. As regards crops development, 67% were in good conditions, 26%, in average conditions, and 7%, in bad conditions. For Rio Grande do Sul, according to a report released by Emater on October 10, the harvesting has reached 1% of the state area.


The harvesting beginning in RS pressed down the quotes paid to growers. In PR, however, price drops were constrained – agents consulted by Cepea claim that the production decrease in the state should be significant, and, thus, sellers were focused on the accomplishment of contracts.


WORLD SUPPLY AND DEMAND – According to data released by the USDA on October 10, the world wheat production in the 2019/20 season should total 765.23 million tons, 4.8% up compared to that in the previous crop. World consumption may grow by 2.5%, and the inventory/consumption ratio should be at 38.3%. Global trades in the current season should total 179.7 million tons.


For Brazil, Conab (National Company for Food Supply) released a report on October 10 revising down, by 5.3%, wheat crops productivity, compared to that in the previous season, to 2.52 tons per hectare. As for the Brazilian output, it is estimated to reach 5.14 million tons, 5.1% down compared to that last crop. Compared to that reported in September, productivity and production estimates were revised down by 4.6% each.


Domestic supply (initial inventories + production + imports) is predicted at 12.9 million tons. Consumption in Brazil was kept at 12.1 million tons, and exports, at 600 thousand tons, with ending stocks by July/20 at 204.4 thousand tons.


IMPORTS AND EXPORTS – In September/19, Brazil imported 492.2 thousand tons of wheat, 1.2% more than it did in August/19, according to data from Secex. The price of the wheat imported averaged 959.74 BRL per ton, FOB (Free on Board, origin), considering the average US dollar at 4.12 BRL in September, 3.7% up compared to that in August and the highest in the year, in nominal terms.


Argentina should continue to export wheat to Brazil, despite its lower share in the market. Of all the volume imported by Brazil, most part (71.9%) still comes from Argentina, 15.4% comes from the United States, 8%, from Paraguay, and 3%, from Russia. France and Lebanon exported wheat to Brazil too, but the volumes were not significant.


The Brazilian exports of wheat grain increased from 51 tons in August to 236 tons in September, and the product was mainly sent to Japan, the Bahamas, Malta, Cyprus, Hong Kong, Liberia, Marshall Islands and Panama.




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