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Agricultura

Supply hits a record in 2021, but high parity sustains prices

 
Cepea, January 3, 2022 – 2021 started with expectations of area increase. In that period, producers were focused on the lower supply of wheat in Argentina, on record prices registered in 2020 and on the delay of sowing activities for the second corn crop in Paraná, São Paulo and Mato Grosso do Sul, because of the lower volume of rainfall.

 

Due to the higher area, the domestic production was a record in 2021, despite problems of the climate during the development of crops, such as frosts and dry weather. Even with the high supply in Brazil, prices hit nominal records because of the dollar valuation, expectations of lower international supply, firm demand and mainly by the high import parity.

 

According to data from Conab, the production in 2021 was estimated at 7.81 million tons, for a sharp increase of 25.3% compared to the crop in 2020, which was affected by the weather. The area increased 16.3% in the same comparison, at 2.72 million hectares. Productivity, in turn, was projected at 2.868 tons per hectare, 7.7% up in relation to that in 2020 (2.663 tons per hectare).

 

As for prices, Cepea surveys show that, from 2020 to 2021, in the wholesale market (deals between processors), prices rose by 35.3% in São Paulo, 32.8% in Rio Grande do Sul, 32.7% in Paraná and 31.5% in Santa Catarina. Prices paid to wheat farmers also increased.

 

In the first five months of 2021, trades were moving at a slow pace in the domestic market, and prices were moving up significantly. Sellers were limiting the volume offered, while purchasers claimed to have inventories, indicating a low demand for byproducts.

 

Between June and mid-July, domestic prices moved down because of estimates reinforcing the area increase and international decreases. In late July, frosts and low temperatures caused losses in some crops in Paraná, Santa Catarina and São Paulo, influencing prices to move up. In August, the low volume of rainfall and high temperatures concerned agents, keeping wheat prices firm.

 

The harvesting of the new crop started in September in Brazil, and productivity was expected to hit a record in Rio Grande do Sul and Santa Catarina. In Paraná, the productivity should also increase compared to 2020, although not hitting a record. As the harvesting advanced in September, mainly in Paraná, and the wheat availability was higher, liquidity increased in the domestic market.

 

In October, players were focused on the harvesting, and producers started to store high-quality wheat to trade in the first semester of 2022, when prices are higher than the annual average. In the last months of the year, prices remained firm due to high international values, the lower global supply and the import parity.

 

BYPRODUCTS – High costs of the raw material and more expensive values for electricity and transportation led players to adjust prices of byproducts. From 2020 to 2021 (up to December 23), for instance, average quotes for bread flour increased by 19.3%. Concerning wheat bran, the upward trend was triggered by the firm demand, due to the valuation of competing products in animal feeding, such as corn.

 

(Cepea-Brazil)

 

 

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