South America Calling

Brazil's government Tuesday announced it will offer R$150 million ($62.5 million) to support wheat prices following the recent slide over the last months

The subsidy will be paid on sales of the 2014 crop below 557.50 Brazilian reals per metric ton ($6.32 per bushel) for No. 1 hard wheat, the ministry said.

Prices in Parana, Brazil's No. 1 wheat state, are already well below that level, trading at R$520 per ton Wednesday and the announcement did had no immediate effect on prices.

Brazil has just started its wheat harvest -- according to the Parana agriculture secretariat, some 18% of the crop has been collected -- and it looks like being a bumper crop.

Parana state says 85% of its crop is in excellent condition, while the Agriculture Ministry forecasts Brazil will produce 7.7 million metric tons (mmt) in 2014, up 39% on the year before following a 21% increase in planting area.

However, heavy rains are predicted in late October and November, which is a concern for farmers in the southernmost state of Rio Grande do Sul, which accounts for approximately 40% of production.

Brazil is a major wheat importer. The government forecasts it will bring in 5.5 mmt of wheat this season. Argentina is the country's main supplier, although small crops there have forced Brazil to import more wheat from the U.S., Canada and elsewhere in the last couple of years. It also exports some wheat. This year, the government estimates 650,000 metric tons will be shipped.

(ES)

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