Commodity Shuttle: Despite high prices, Paraná reduces wheat area and resumes bet on corn

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Producers from Paraná place the machines in the field for the beginning of wheat planting. Just over 0.5% of the area that will be used for cereals has already been sown.

Despite the international scenario of high prices and uncertain supply, which should favor planting, farmers in Paraná are not betting much on this crop.

The Deral (Department of Rural Economy) of Paraná maintains expectations of an area reduction this year. The most recent data indicate a drop of 4% compared to 2021, to 1.17 million hectares.

It is an expected drop since the previous crop, says Carlos Hugo Godinho, wheat analyst at the entity. In the 2020/21 crop, the delay in planting soybeans delayed the planting of corn, favoring wheat. The result was an increase in wheat area due to the loss of the ideal period for sowing corn.

This year, the pace of planting returned to normal, and the option for corn prevailed, where there is a history of planting in the off-season, says Godinho.

The price of a sack of wheat, at R$93, is high, but the costs do not leave much room for the farmer, especially for those who have left to buy inputs in recent months.

This option by the producer from Paraná for the off-season corn made Safras & Mercado redo its calculations for wheat. Élcio Bento, an analyst at the company, forecasts a total area, now, of 3 million hectares in the country, with a record production of 9.5 million tons. The previous estimate was 3.6 million hectares.

This year’s production potential is good, due to the cooler weather, and the price scenario is favorable, says the analyst. With that, the production of Rio Grande do Sul should surpass that of Paraná again.

Alencar Rugeri, technical director of Emarter/RS, says that the scenario is favorable for Rio Grande do Sul, and the producer is determined to increase the wheat area.”Technically, the perspectives are good, but there are some obstacles to be solved “, he says. Among these bottlenecks, the director puts the difficulty of resources and the high cost of inputs.

It is a rare year, and the producer will plant more. How much more, however, is not known, he says. “It’s no joke. The producer has to be professional, given such high costs. Business management will be essential.”

Russia’s war with Ukraine is not the only factor driving wheat prices, but just another one, according to Benedict.

The size of the next world crop is undefined. The weather affects the US and China, two of the world’s biggest producers. The US exports, and China, if it enters the world market buying, changes prices.

Furthermore, the war is not defined, and the two countries are representative in the international market.

Before Russia invaded Ukraine, however, wheat prices were already rising. Canada, Russia and the United States had a shortfall in the last harvest, and world stocks, which were 300 million tons two harvests ago, are at 278 million, according to the USDA (United States Department of Agriculture).

Cepea (Center for Advanced Studies in Applied Economics) shows the strong internal evolution of the cereal. In April 2019, the ton of wheat was at BRL 881, rising continuously until reaching the current BRL 1,916.

Domestically, corn has greater appeal to the producer than wheat. Corn is a more dynamic market, while wheat depends a lot on mills, according to the Safras & Mercado analyst.

In the United States, heavy investments in ethanol production have also made corn more attractive than wheat, he said.

The national wheat market begins to follow the path of corn, increasing exports. In the first three months of this year, foreign sales of wheat totaled 2.21 million tons, according to Secex (Secretariat of Foreign Trade).

This month, in the first 14 working days, sales reached 125 thousand tons, according to data released this Monday (25). At least 2 million tons left Rio Grande do Sul. The product from Rio Grande do Sul has been favored by importers, and the presence in the foreign market is good for the development of the domestic market, says Bento.

He warns, however, to the fact that the cost of production of the Brazilian product still has a great disadvantage in relation to large producers, such as Canada, Russia and the USA.

At the moment, the high international prices and the high exchange rate facilitate the placement of Brazilian wheat abroad. Without these conditioning factors, it will be more difficult.

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