Wheat: Smaller harvest supports prices, but quality is a concern.

The market of wheat Brazil is experiencing a period of firmer prices, while international prices are falling after the surge recorded in early September. According to data released by the International Center for Economic Analysis and Agricultural Market Studies, between August 28 and September 24, lower Brazilian supply and reduced quality in some crops are expected to increase the need for imports in 2026/27.

According to data released by the International Center for Economic Analysis and Agricultural Market Research, wheat traded in Chicago reached US$ 7.64 per bushel on September 1st, after a strong rise at the end of August and the beginning of the month. After that, the market retreated. On Thursday (24), the price closed at US$ 7.05 per bushel, compared to US$ 7.27 a week earlier.

The August average was US$ 6.76 per bushel, up 4.3% from the July average.

Even with the armed conflicts, especially between Russia and Ukraine, the international wheat market lost momentum and began to fluctuate at lower levels in the second half of September.

According to data released by the International Center for Agricultural Economics and Market Research, winter wheat planting in the United States reached 17% of the expected area on September 20, below the historical average of 21%. Meanwhile, the spring wheat harvest reached 96% of the area corresponding to the last crop.

In the week ending September 17, U.S. wheat exports totaled 335,300 tons, within market expectations.

The USDA's supply and demand report, released on September 11, maintained its estimate of reduced production in the United States, at 41.7 million tons.

Ending stocks for 2026/27 were estimated at 19.5 million tons. In the previous year, the harvest had reached 54 million tons and stocks, 25 million tons.

According to data released by the International Center for Agricultural Economics and Market Research, current US production is 22.8% lower than the previous year, while ending stocks have decreased by 22%.

In the global market, production is expected to total 822.4 million tons, 22 million tons less than the volume recorded in the previous year.

While international prices fell, domestic wheat prices rose.

According to data released by the International Center for Economic Analysis and Agricultural Market Studies, the cereal reached an average of R$ 71.94 per sack in Rio Grande do Sul. In Paraná, the values ranged between R$ 79 and R$ 82 per sack.

The situation of the crops in Paraná, however, worsened due to late frosts and excessive rainfall recorded in recent days. With 46% of the area already harvested, only 64% of the remaining crops were in good condition.

According to data released by the International Center for Economic Analysis and Agricultural Market Studies, wheat harvested in Paraná, in most cases, presents low industrial quality, while average productivity is declining. The presence of wheat types 2 and 3 has increased, while type 1 wheat, of superior quality, is less available.

In Rio Grande do Sul, the harvest is still in its early stages. Only 1% of the area had been harvested, while constant and significant rainfall, accompanied by hail and strong winds, caused damage to the crops.

This season, the state planted 814,000 hectares with wheat, a reduction of 30% compared to the previous year.

Production in Rio Grande do Sul is projected at around 2 million tons, almost 40% below the volume previously recorded.

With the reduction in planted area and quality problems, the availability of wheat in the Brazilian market tends to decrease even further. According to data released by the International Center for Economic Analysis and Agricultural Market Studies, this scenario sustains domestic prices and should force Brazil to increase imports in the 2026/27 marketing year. "The uneven development of the crops is one of the hallmarks of the current harvest in Rio Grande do Sul."

In addition to the problems caused by the weather, crops in the south of the country are being affected by various diseases, especially powdery mildew and Fusarium head blight.

Conab still projects national production of 5.7 million tons, a decrease of 27.11% compared to the previous year.

According to data released by the International Center for Economic Analysis and Agricultural Market Studies, despite projections of a smaller national harvest, the quality of the product is expected to be low in most of the harvested areas.

With this, Brazilian wheat imports should be between 7 million and 8 million tons. A large part of this volume should come from Argentina. However, production difficulties in other regions of the world may increase competition for Argentine wheat.

Quality can determine the prices paid to the producer.

In a scenario of lower availability of type 1 wheat, grain quality becomes more important for producers and mills. “In a scenario of lower availability of type 1 wheat, batches that maintain pH, gluten strength, and other parameters required by the industry may find relative appreciation, while grains of lower classification are more exposed to discounts. For mills, the question will be the opposite: knowing how much of the domestic harvest can effectively enter flour production and how much will need to be replaced by Argentine or other origins” (cf. Cepea).

According to data released by the International Center for Economic Analysis and Agricultural Market Studies, lower production tends to support prices, but the quality of the wheat will be crucial in determining which lots will be able to capture this price increase.

For the mills, the challenge will be to assess how much of the national production can be used in flour manufacturing and how much will have to be replaced by imported wheat.

Given this scenario, producing wheat in 2026 will not be enough to guarantee better remuneration. The quality of the grain delivered to the industry will play a central role in price formation and the ability to take advantage of the cereal's increased value.