Estimates for the 2020 season are positive; prices should stay firm

Cepea, August 18, 2020 – The high price levels for wheat and its by-products in 2020 encouraged growers to increase the area allocated to the cereal in Brazil. So far, perspectives for the 2020 crop are positive, but total supply and quality still depend on the weather.


In the Brazilian spot market, the trading pace for wheat was slow in the first fortnight of August, but Cepea collaborators reported some bids for the new crop, primarily in the wholesale market. Besides, some sellers were trying to sell the inventories remaining from the previous season – these agents are optimistic about the new crop.


This month, Conab (Brazil’s National Company for Food Supply) has released a report pointing to an increase of 14.1% in the area allocated to wheat in Brazil in 2020, to 2.33 million hectares, influenced by larger crops in southern Brazil – in Rio Grande do Sul, the wheat area grew by 25.1%, and in Paraná, by 10.4%. National productivity is expected to reach 2.9 tons per hectare, 16.1% higher than the average last year, influenced by estimates for an increase of 41.8% in Paraná. Thus, supply is currently estimated at 6.8 million tons, 32.5% higher than that in 2019.


Thus, Conab has revised down imports estimates for the period between August/20 and July/21 to 6.7 million tons, similar to that in the past 12 months. Domestic availability (initial inventories + production + imports) should total 13.76 million tons, 5.6% up compared to that in the previous season. Consumption is forecast at 12.5 million tons in Brazil, the same volume registered in the two past years, resulting in a surplus of 1.26 million tons – against 570 thousand tons in the previous crop, which should partially offset ending stocks.


CROPS – Data from Seab/Deral indicate that, of the crops sown in Paraná, 83% are in good conditions, 14%, in average conditions, and 3%, in bad conditions. This scenario is better than that observed in the last three crops. In Rio Grande do Sul, Emater/RS has reported that higher soil moisture added to the dry and sunny weather with wide temperature range favored the development of wheat crops.


IMPORTS – Secex (Foreign Trade Secretariat) data indicate that Brazilian wheat imports totaled 509.1 thousand tons in July, 14.7% more than that imported in June/20, but 8.8% lower than that from July/19.




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