Brazil hiked its forecasts for wheat imports for next season
close to record highs, in a briefing which also cautioned over some quality
setbacks, but strong production prospects, for the ongoing safrinha corn
The official Conab crop bureau hiked by 800,000 tonnes to
7.00m tonnes its forecast for Brazil's wheat imports in 2017-18, placing the
figure only 20,000 tonnes below the high reported for 2012-13.
The extent of the country's import needs reflects in part the
expectation of a sharp decline in the country's own production in 2017, of 23%
to 5.21m tonnes, a figure in line with Conab's estimate last month.
The forecast reflects in part an expectation of a retreat in
yields from last year's bumper levels, but also the dent to prospects from "current
low prices" of the grain.
In Parana, Brazil's top wheat-growing state - where prices
stand at R$621.54 ($189.67) a tonne, according to Cepea, down 27% year on year
- sowings are expected to fall by 8.7%.
In second-ranked Rio Grande do Sul, where prices are, at R$573.75
($175.08) a tonne, down 30% year on year, plantings were forecast tumbling by 10.0%
"due to the low price".
"In some regions of the state, however, this reduction could
reach 30-40%, especially in those areas with a prevalence of large producers,"
Areas with smaller growers were showing the smallest cut in
sowings, as these producers "have the need to maintain some source of income in
winter and, even if productivity is low and only covers the cost of production,
there will be benefits to the next crop".
However, Conab also flagged a boost to domestic consumption
from the "wide supply" of wheat, both domestically and globally, evident too in
surprisingly strong imports for this season.
Indeed, "in light of the figures released on imports so far",
the bureau also raised by 360,000 tonnes, to 6.92m tonnes, its forecast for
Brazil's wheat imports in 2016-17.
The estimate for demand this season was raised by 400,000
tonnes to 11.3m tonnes, with only a marginal decline expected next season.
"Projecting an economic recovery scenario, industrial
milling is expected to be around 11m tonnes for the 2017-18 harvest," with some
other uses, such as seed, on top.
Corn quality caution
The comments came in a report when Conab also raised its
estimate for Brazil's newly-started safrinha corn harvest by 840,000 tonnes to a
record 63.5m tonnes, reflecting an increased estimate for sowings in Mato
Grosso, the top producing state.
Early harvest results had been in line with yield projections,
but the bureau cautioned of quality losses due to heavy rains.
"Due to the rains, there are reports in the mentioned
regions that the cereal coming from the first plots has arrived at receiving
units showing damage above the tolerable limit due to the excess humidity,"
The estimate for overall corn production in 2016-17, including the so-called "main" crop, was raised by 1.0m tonnes to 93.8m tonnes.
The bureau also raised by 910,000 tonnes, to 113.9m tonnes,
its estimate for soybean production, reflecting largely an increased estimate
for yields in Rio Grande do Sul shown up by the harvest, which is now nearly