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Brazil's wheat harvest to hit record high

Brazil's next wheat crop will set a record, boosted by rising sowings among farmers who, thanks to a recovery in prices, are switching some ground to the grain instead of corn.

Brazil whose wheat fortunes are closely watched, given its reliance on imports for much of its milling needs - will in 2014-15 harvest 6.7m tonnes of wheat, official crop bureau Conab said in its first estimate.

That would represent a 22% jump in production from last year, when Brazil's harvest was hurt by a series of frosts, and a record high, easily surpassing the 6.1m tonnes harvested 27 years ago.

It is also far higher than estimates from some other commentators, including the US Department of Agriculture's Brasilia bureau, which has pegged the crop at 5.0m tonnes.

'Strong demand'

Conab said that its forecast reflected in part a revival in the popularity of wheat among growers who have overlooked the crop in recent seasons, with sowings set to rise 14.2% to 2.52m hectares.

The bureau highlighted the role of "strong demand" for which, which has "reflected favourably with producers", after the dearth of exports from neighbouring Argentina, Brazil's default import origin, sent buyers seeking supplies elsewhere.

The US has been a major beneficiary, exporting 3.74m tonnes of wheat to Brazil so far in 2013-14, with a further 240,000 tonnes on order nine times the combined shipments and orders as of a year ago.

Seed shortage?

The rise in area will be led by Parana, where sowings will soar by 22% to 1.2m hectares, earning the top rank among Brazil's wheat growing states, overtaking Rio Grande do Sul, where sowings will rise to about 1.1m hectares from 1.04m hectares last year.

Indeed, there has been talk in Brazil of a shortage of seed, although Conab downplayed such concerns, saying there should be "no shortage" except of some "specific varieties" of which supplies were damaged by frost last year.

In Rio Grande do Sul, farmers are using kept seed "to lower costs and reduce dependence on more expensive credit offered by suppliers".

Wheat vs corn

The estimated rise in Parana sowings concurs with observations within the state of a switch to planting wheat rather than second-crop corn.

"Farmers in the state decided to switch some of their safrinha corn acreage to wheat due to lower corn prices and strong wheat prices," respected crop scout Michael Cordonnier said.

"Domestic wheat prices have moved higher due to stronger international wheat prices and a disappointing 2013 wheat crop in Brazil."

Conab's estimates came in a report in which it also raised by 640,000 tonnes to 86.1m tonnes its forecast for Brazil's soybean crop this year, although the figure is still below the 87.5m tonnes at which the US Department of Agriculture on Wednesday pegged the harvest.

Conab forecast Brazil's corn production at 75.5m tonnes, an upgrade of 280,000 tonnes on its March estimate, and above the USDA figure of 72.0m tonnes.

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