Smaller production in Brazil is confirmed; liquidity is low

Cepea, December 17, 2019 – The final stage of harvesting activities has been confirming the lower wheat production in Brazil. As a result, in the second fortnight of December, producers were firm regarding prices and were unwilling to trade, expecting new price rises because of high dollar quotes. Purchasers, in turn, were supplied with previous imports. Most part of wheat mills were likely to stop grinding activities temporarily, for maintenance. In this scenario, liquidity remained low in early December.


PRODUCTION – A report released by Conab on Dec. 10 indicated that the national wheat production may total 5.2 million tons, 3.9% smaller compared to that in the season before – unfavorable weather conditions affected the production, mainly in Paraná. Productivity in the state decreased 17.1% and production, 22.7%, amounting 2.2 million tons in the current season.


In Rio Grande do Sul, on the other hand, the planted area increased 8%, productivity, 9.2% and production, 17.9%, totaling 2.2 million tons. Although the state had also registered climate problems, the supply has increased compared to 2018.


The total supply (initial stocks + production + imports) may total 12.8 million tons. The domestic consumption reduced to 11.8 million tons and exports were kept at 400 thousand tons, with ending stocks (in July/20) at 612.7 thousand tons.


According to data from Secex, Brazil imported 446 thousand tons of wheat in November, 26.5% less than that from October/19 and 9.7% less than in November/18. Of this total, 60.1% came from Argentina, 21.3%, from the United States, 7.7%, from Canada, and 5%, from Paraguay. The average price for the product imported was 889.15 BRL per ton, FOB (Free on Board, origin), considering the US dollar at 4.16 BRL in November. Brazilian wheat exports, in turn, were very low.


As regards wheat flour, imports in November were 20.4% lower than in October/19, totaling 25.6 thousand tons. Brazilian exports of wheat flour, in turn, totaled 1,483 tons, 46.1% down compared to the amount shipped in October.




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