Supply should decrease in Brazil and hit a record in Argentina

Cepea, August 5 2019 – Wheat crops are developing in Brazil and production is expected to be lower than that in the previous season. In light of that, Brazilian agents are aware that a record amount of wheat from Argentina may enter into the domestic market from October. In general, despite the higher supply, Argentina should diversify wheat exports this year, since important international players have reduced exports, such as Australia. Thus, Brazilian mills may compete with other countries for the Argentinean wheat. It is worth to mention that Argentina is the biggest wheat supplier to Brazil – and Brazil is the biggest purchaser of the Argentinean wheat.

 

Data from Deral/Seab indicate that wheat production in Paraná may decrease by 3% this year-crop, to 2.724 million tons (estimates from early 2019 indicated an output at 3.23 million tons in that state). Productivity should be at 2.7 tons per hectare. Estimates should be revised as crops develop.

 

In the spot market, agents from Brazilian mills are aware of the higher price levels, mainly in the southern region. Cooperatives have also increased the prices paid to growers, in order to encourage new trades. However, it is worth to mention that this scenario is mainly observed in western PR, where production may decrease the most in 2019/20.

 

FIELD – In Paraná, 63% of the crops are in good conditions, 27%, in average conditions, and 10%, in bad conditions. In Rio Grande do Sul, only 1% of the area still needs to be sown.

 

(Cepea-Brazil)

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