Rains in Brazil’s wheat belt have provoked concerns that the country’s harvest may, once again, be dogged by quality concerns, undermining hopes that a highest-specification crop would enable a drop in imports.
While dryness was a feature of the early growing season in many growing areas – including in Brazil’s top wheat-growing state, Parana – the return of rains has “concerned growers”, research institute Cepea said.
According to weather service MDA, Brazil’s southern, wheat growing areas have received notable rains this week, with Rio Grande do Sul state expected to see “heavy rains… which will stall wheat harvesting”.
Cepea said that in both Rio Grande do Sul and neighbouring Santa Catarina “forecasts point to heavy rains and storms”, while in Parana, the group wheat-growing state, “weather may continue warm… favouring the formation of clouds”.
While rain earlier in the growing season is viewed as favourable to yields, moisture encourages ripe grains to sprout, and is seen as a threat close to harvest – which is well underway in Brazil.
In Parana, harvest progress has reached 64% of the 1.08m hectares seeded, according to state agriculture office Deral
“Most wheat producing regions in Brazil were harvesting in the first fortnight of October,” said Cepea.
“Thus, rains in that period have concerned growers,” who are worried over the wet outlook too.
‘Beginning of the recovery’
Indeed, crop damage would dash expectations of a strong quality harvest, which has been the case up to now in Parana, continuing, and undermine ideas that Brazil will see its imports – which are often spurred by a need for high quality grain – fall in 2016-17 to multi-year lows.
Conab, the official Brazilian crop agency, has forecast Brazil’s wheat imports dropping to a 12-year low of 5.30m tonnes, while seeing a rebuild in inventories too, underpinned by a rise of 805,000 tonnes to 6.33m tonnes in production too.
The bureau said that the harvest raised the potential for sparking “the beginning of the recovery of industrial use in Brazil to 10.4m tonnes due to the greater availability of raw materials of good quality”.
Total use, including seed, was pegged at 10.72m tonnes in 2016-17, behind in recent years only the 11.38m tonnes consumed in 2013-14.
The harvest will, “hopefully… be of superior quality, free mycotoxins, due to the favourable climate,” unlike 2015 and its heavy harvest-time-rains, blamed on the El Nino.
Brazil typically imports its wheat from Argentina and, in some years, from North America too.
Meanwhile, wheat prices in Parana are showing signs of bottoming out, recording on Tuesday a third successive winning day for the first time since June.
However, at R$635.50 a tonne, values are still 30% below their early-July peak, when many livestock feeders switched to the grain, as a weak safrinha corn harvest undermined corn supplies.
Whatever the impact of the rainfall worries on prices, values are seen as being primarily supported at the moment by their fall below the government of a guaranteed price of R$38.65 per sack, equivalent to some R$644 per tonne.
“The Brazilian government is aware of the low prices and the Ministry of Agriculture has indicated that they will start purchasing wheat under the Pepro programme” for buying grains, said Michael Cordonnier at Corn and Soybean Advisor.
“It is thought that they could purchase up to 300,000 tons of Parana wheat.”
Conab two weeks ago flagged the potential for “the acquisition by the federal government of a share of surplus production to replenish government stocks”, which are “virtually non-existent today”.
(Source – http://www.agrimoney.com/news/rains-provoke-fears-of-rain-damage-to-brazils-wheat-crop—again–10041.html)