Wheat Supplies: 2014/2015 production is forecast at a 6.3 million metric tons (mmt), up 15 percent from the previous year, but down substantially from initial estimates of over 7 mmt. This is due to a series of weather events affecting the primary producing state - too much rain, freezing temperature, excessive heat, hail, etc. Normally, Rio Grande do Sul is the largest wheat producing state with over half of domestic prodcution, but due to the weather issues and subsequent disease problems, the state experienced a 56 percent decrease in yields leading to a 52 percent reduction in production. There were issues with the fungus desoxynivalenol (DON). Brazilian millers accept no more than two parts per million (ppm) of DON, and some reports estimate that DON levels could be over that threshold for 67 percent of the wheat crop in the state of Rio Grande do Sul. While there were genetic improvements in terms of meeting domestic baking specifications this year, those benefits were offset by the weather-related poor quality.

Wheat Trade: Post estimates MY 2014/2015 imports at 7 mmt as a result of the poor crop. Much of the wheat that has been harvested is not of milling quality and because of this Brazil will need to import more high quality wheat for milling. Argentina may re-enter the market as a main supplier, if the economic uncertainty there is improved and the government continues to allow exports. So far in 2014/2015 the Argentine government has authorized 2.6 mmt of exports out of a potential 8 mmt of exportable supplies and has sent signals that they may authorize more. The quality of the Argentine wheat is considered average. In CY 2014, Brazil imported 2.64 mmt of U.S. wheat, which was 46 percent of the total market share, down two percent from the previous year.

Post estimates MY2014/2015 exports at 1 mmt, a huge increase from the previous year's exports at only 50,000 metric tons, almost all of which went to Paraguay. The reason for the increase is that in 2013/2014 Brazil didn't have enough wheat for export. This year, as a result of the poor crop, Brazil has a surplus of low quality feed wheat for export that can't be used domestically due to higher than acceptable levels of the DON fungus. While Brazilian millers accept no more the 2 ppm, other countries will accept 3 to 5 ppm. Despite the higher DON concentration, the wheat still has a good gluten content and could be exported.

Wheat Consumption:2014/2015 consumption is forecast to increase 8 percent from the previous year to 12.4 mmt, due to increased feed wheat use from the poor crop. While consumption is up overall, the Brazilian wheat industry is concerned that fad diets, such as the "gluten-free" diet could decrease domestic consumption up to 3 to 4 percent in the future. The industry is working to provide information to the public about the health benefits of wheat in a balanced diet

Wheat

2012/2013

2013/2014

2014/2015

Market Begin Year

Oct 2012

Oct 2013

Oct 2014

Brazil

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

1,900

1,900

2,200

2,200

2,600

2,600

Beginning Stocks

1,748

1,748

1,001

1,001

1,867

1,917

Production

4,380

4,380

5,300

5,300

6,300

6,300

MY Imports

7,357

7,357

7,066

7,066

7,000

7,000

TY Imports

7,547

7,547

7,061

7,061

7,000

7,000

TY Imp. from U.S.

1,278

1,278

4,134

4,134

0

2,000

Total Supply

13,485

13,485

13,367

13,367

15,167

15,217

MY Exports

1,584

1,584

100

50

1,000

1,000

TY Exports

1,753

1,753

81

81

1,000

1,000

Feed and Residual

200

200

600

600

1,000

1,000

FSI Consumption

10,700

10,700

10,800

10,800

11,300

11,300

Total Consumption

10,900

10,900

11,400

11,400

12,300

12,300

Ending Stocks

1,001

1,001

1,867

1,917

1,867

1,917

Total Distribution

13,485

13,485

13,367

13,367

15,167

15,217

1000 HA, 1000 MT, MT/HA