South America Calling

Four consecutive freezing nights last week across Brazil's southern grain belt hit wheat crops hard.

Agronomists are still assessing the damage, but wheat millers estimate that up to 10%, or around 300,000 metric tons, of the crop in the top-producing Parana state was lost.

According to the Parana State Agricultural Secretariat, some 52% of the state's crop was in the later stages of development -- the boot, heading and flowering stages -- when wheat plants are susceptible to cold.

The percentage of the state's wheat crops in good condition dove from 78% to 47% last week while the percentage in poor condition shot up from 4% to 18%, according to a weekly report issued by the secretariat.

Parana produces just over half of Brazil's wheat crop, which the government pegs at 5.6 million metric tons this season. The wheat in neighboring Rio Grande do Sul, which produces much of the other half of Brazil's output, was generally too young to be much affected by the cold snap.

Brazil's wheat harvest typically accelerates from September.

Brazilian demand for wheat will be 10.8 mmt in 2013/14, according to the government, and agricultural powerhouse or not, the tropical country can't meet those needs. It typically relies on Argentina and Uruguay, its Mercosur trade bloc partners, to meet the shortfall. But tight supplies in Argentina mean they aren't exporting until 2014.

Instead, Brazil has had to rely on North American markets. The government has already lifted duties on 2 mmt in U.S. and Canadian wheat imports bought this year.

Millers had asked for 3 mmt in duty-free imports and maintain that request in light of the frost damage suffered last week.

(AG)

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