Lack of sellers in the market push up quotes in Brazil in October

Cepea, November 5, 2020 – Wheat grain prices ended October on the rise in Brazil, boosted by the absence of sellers in the market, the interest of purchasers in closing deals and the strong dollar, which makes imports more expensive, favoring the national product. Agents from processors made sporadic purchases and many of them claimed difficulties to pass on wheat valuations to by-products (wheat flour and bran).


In October, wheat prices averaged 1,286.02 BRL/ton in the wholesale market of Paraná State (PR), a staggering 11% up compared to that in September and 54.5% above that in October/19, in nominal terms. In São Paulo (SP), quotes averaged 1,290.09 BRL/ton last month, 9.6% up in the monthly comparison and 49.4% up in the year. In Rio Grande do Sul (RS), the average price in October closed at 1,286.02 BRL/ton, 1.9% higher than that in September and 63.6% up compared to that in October/19.


Data from Seab/Deral released on October 26 indicate that wheat sales had reached 47.3% of the total volume estimated, against 29.2% a month ago. Cepea collaborators believe that liquidity was low and prices high in the Brazilian market because farmers had already made cash flow. Although purchasers were not pleased with that scenario, it was more advantageous to buy wheat in the Brazilian market than from the international market. In October, the dollar rose by 2.3% against Real, ending the month at 5.74 BRL.


CROPS – Data from Seab/Deral indicate that, until October 26, the wheat harvesting in Paraná had reached 90% of the state area, meaning that activities have been faster than in previous seasons. Of the total area sown, 82% were in good conditions at the end of the month, 17%, in average conditions, and 1%, in bad conditions.


According to data from Deral released on October 29, the losses in Paraná, caused by weather issues in the last month, led to a reduction of 15% in the productive potential of wheat crops, and production estimates were revised down from 3.68 million tons to 3.13 million tons.


In Rio Grande do Sul, activities were favored by the dry weather, having reached 60% of the state area until October 29, which accounts for 550 thousand hectares. In the same period last year, activities had reached 42% of the state area.




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