Cepea, November 17, 2020 – The wheat harvesting is ending in the major producing states in Brazil, and prices began November on the rise. These increases reflected the absence of sellers in the market – these agents expected higher valuations. Corn prices, which have been at record levels, helped to underpin wheat quotes, since these products are both used in feed. In this scenario, agents from processing plants reported difficulties to pass on the high prices of wheat grain to by-products. Thus, deals were sporadic.
However, this scenario changed in the second week of the month. The US dollar dropped against Real, reducing the import parity. This scenario resulted in wheat devaluations in the Brazilian market. Also, agents were aware of the data released by Conab (Brazil’s National Company for Food Supply) this month, which point to a smaller output compared to that previously estimated – Rio Grande do Sul is the state with the lowest wheat production. Besides, world production estimates were also revised down compared to that previously reported, reducing ending stocks.
According to Conab’s report, the area sown with wheat in Brazil has totaled 2.34 million hectares, 14.6% larger than that last season. Productivity should also be higher than that in the previous season, by 7.6%, despite the losses, primarily in Rio Grande do Sul. Thus, the Brazilian output should total 6.35 million tons, 23.3% higher than that in 2019, but 7% below that expected until October.
Conab forecasts wheat imports to total 6.8 million tons between August/20 and July/21, which should result in a domestic availability of 13.4 million tons, higher than the 13 million tons last season. This volume should be enough to meet the domestic demand, of 11.8 million tons, against 12.5 million tons between August/19 and July/20. Exports are estimated at 700 thousand tons. Thus, in July/21, stocks should be at 883.5 thousand tons, against 227.4 thousand tons in July/20.
CROPS – According to data from Seab/Deral, until Nov. 9, the harvesting had reached 97% of the area in Paraná. Of the crops sown, 92% were in good conditions and 18%, in average conditions. In Rio Grande do Sul, according to Emater, the wheat harvesting had reached 95% of the state area. The weather (mostly dry) during the fortnight favored activities – in the same period last year, the harvesting had reached 81% of the area.
IMPORTS – Wheat prices have been on the rise in supplying countries to Brazil, and the strong dollar (despite the recent depreciation) makes imports more expensive. According to Secex, in October, Brazil imported 508.6 thousand tons of wheat, 9% more than that from September, but 16.2% less than that from Oct/19. Of the total volume imported last month, 36.5% came from Argentina, 33.7%, from the United States, 16.8%, from Uruguay, 9%, from Russia, and 4%, from Paraguay.