Brazil Imports Paraguayan Wheat Due to Its Competitive Price
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Paraguayan Wheat production in marketing year (MY) 2023/2024 is forecast at 1.25 million metric tons (MMT), the highest in the past four years. Planted area is projected at 500,000 hectares (HA), 11 percent higher than the previous crop season. Wheat planted area is very dependent upon the area planted to zafrinha (second-crop) corn and soybean crops, usually planted in January-March every year.
In 2023, there was a lower corn area and a more significant soybean acreage because of a delayed harvest of the previous and zafra (main) soybean crop (usually harvested in January). There was also a larger-than-normal area not seeded. Wheat is planted on idle soil and land immediately after soybean zafrinha, typically harvested in May. Corn has a longer cycle, commonly harvested later, which usually prevents farmers from following corn with Wheat. The combination of a larger area with soybeans and idle land is expected to encourage farmers to plant more Wheat.
Production costs in MY 2023/2024 are expected to be lower than the prior year because of a significant drop in fertilizer prices and some agricultural chemicals. Many farmers use Wheat to rotate crops to protect the soil and incorporate nitrogen, especially in rotational schemes with a strong predominance of soybeans. Planting Wheat keeps the soil under cover in winter, with a crop that requires different chemicals than soybeans and helps to protect the soil from erosion and control glyphosate-resistant weeds. Farmers usually feel commercially secure in planting more Wheat because Brazil can generally take surplus Grain in addition to having solid domestic demand.
While this production forecast assumes typical weather conditions, farmers anticipate wetter conditions. The Southern Cone region has experienced three consecutive years of a La Niña climate pattern, which usually results in drier weather. This year many private forecasters are predicting a neutral or El Niño pattern which should lead to more abundant rains. Some producers, especially in southeastern Paraguay, may be somewhat reluctant to plant Wheat in a wet year to avoid the late attack of funguses such as fusarium, which can harm both volume and quality. Wheat is primarily grown in the departments of Alto Parana and Itapua, accounting for roughly half of the country’s acreage.
The Paraguayan Institute of Agricultural Technology, together with private partners, continues to release Wheat-improved seed varieties adapted to the country’s conditions. These are very popular and extended in use. However, rains during the harvest of 2022 affected the Wheat quality, and some farmers may not have good quality saved seed to plant. Post estimates MY 2022/2023 Wheat production at 920,000 MT on a harvest area of approximately 450,000 HA. This is 280,000 MT lower than the official USDA estimate. Heavy rains during the harvest season affected the volume and quality of a significant portion of the production as farmers had to harvest with high humidity.
Wheat Exports in Paraguay
Paraguayan Wheat exports in MY 2023/2024 are forecast at 410,000 MT, the highest since MY 2018/2019. Over 90 percent is expected to be exported to Brazil, the leading historic buyer. Wheat is trucked to Brazil by Wheat flour mills within 250-650 kilometers (KM) of the border. In the past, Paraguayan Wheat was imported to mix and improve Brazilian Wheat, but more recently, it is also imported because of its competitive price.
Paraguay exports roughly 20,000 tons a year of Wheat flour, and this also mostly goes to Brazil. Typically, Bolivia is another destination for Paraguayan flour, but lately, demand has diminished because of the availability of very competitively-priced Argentine flour.
Other sources: USDA
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