Falling local wheat qualities due to rains will likely force Brazil - often the world's largest importer of the grain - to buy more abroad, specialists said. Brazil had initially hoped to harvest a bumper crop that would have helped it through another thin year of wheat exports from Argentina, Brazil's main foreign wheat supplier.
The southern neighbour has suffered from drought and export restrictions on wheat. But a wet winter has unleashed disease and fungus on the southern maturing wheat crop. "It's really a problem - quality has been hurt a lot," said Paulo Magno, a wheat analyst at the government crop supply agency Conab.
Magno, who met with producers in Parana state this week, did not offer any details on an expected drop in output. But he did say that the decline should show up in next week's monthly estimate of the grain crop by Conab. Last week, the farming secretariat of Parana, the leading wheat producer in Brazil, cut its forecast for the state crop to 2.7 million tonnes from the initial forecast for this season of 3.5 million tonnes and 3.2 million tonnes harvested last year.
Parana has harvested about half of its crop so far, while Rio Grande do Sul, another big producing state in the south, is just beginning its harvest. The two states make up about 90 percent of domestic wheat production.
"I think that we are not going to have more than 3 million tonnes (of local wheat) for milling and more or less 2 million tonnes of wheat for feed," said a trader at a multinational grain house. Considering the local stocks and demand, Brazil could import around 7 million tonnes of wheat from 2009/10 (August-July), compared with the 6.1 million tonnes imported in 2008/09, the analyst added.