SAO PAULO: Brazilian wheat crop has the potential to surpass 7 million tonnes this year and reach a record, provided the weather remains favorable throughout the cycle that has just begun, according to analysts interviewed by Reuters.

An expected rise in investment from Brazilian farmers who had a profitable soybean season in the summer and can divert funds into wheat, driving yields higher, will also boost production, they said.

With wheat planting complete in southern states including Paraná and Rio Grande do Sul, and harvesting to begin around August, a survey by consultancy Trigo & Farinhas predicts national wheat production may reach 7.34 million tonnes this year.

The forecast is just over 1 million tonnes above the government's projection of 6.31 million tonnes. In 2019, Brazil harvested 5.15 million tonnes, as farmers faced adverse climate conditions.

Brazil's previous record output was 6.7 million tonnes in the 2016 season, according to government agency Conab. Before that, the highest level occurred back in 1987, with a harvest of 6.13 million tonnes.

"There is a possibility that wheat production in Brazil will reach 7 million tonnes or higher. We really see this potential," said StoneX analyst Ana Luiza Lodi.

She said no significant threat to the crop has been identified, in terms of climate, pests and diseases.

If Brazil's production forecasts are confirmed, demand for imported wheat will likely weaken next year, according to the analysts.