How much wheat is worth in Brazil depends very much where it is.
In Rio Grande do Sul, the top growing state of late, it is worth R$1,657 ($322) per tonne, according to Cepea – the lowest in eight months.
In Parana, however, prices are, at R$1,850 ($359) per tonne, close to their highest since August.
That has expanded their premium to R$192 per tonne, a level seen only twice before in the past five years.
The gap reflects diverging harvest fortunes.
Parana’s crop has been shrunk by a triple whammy of drought, frost and, more lately, copious rains – just when they aren’t needed. Rains on mature crops tend to depress milling quality.
By contrast, Rio Grande do Sul’s harvest is living up to high expectations (in quality as well as quantity terms). So prices are feeling more in the way of pressure from the annual rebuild in supplies.
Rio Grande do Sul vs Argentina
The outcome of the price gap is that wheat is making its way from Rio Grande do Sul north to Paraná, Cepea said.
And that is just as well for Parana millers, given that wheat exports from Argentina that they typically rely on – Brazil is a structural wheat importer – will not be so plentiful thanks to the ravages of drought.