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Brazil: Lower margin for wheat should make producer reduce the area

Published May 21, 2024

Tridge summary

Despite a recovery in wheat prices and reduced production costs, producer margins are at zero or negative in April 2024, as per the Center for Advanced Studies in Applied Economics. This is due to increased cultivation costs and decreased excitement among farmers to grow wheat in 2024, as shown by a 11.1% reduction in the planned area for wheat cultivation by the National Supply Company. However, productivity is expected to rise by 26.2%, leading to a production increase of 12.2% compared to 2023. Spot market prices for wheat have seen a positive variation of 8.87% within the month, reaching R$ 1,405.25 per ton.
Disclaimer: The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

Despite the recent recovery in wheat prices and the drop in production costs compared to the previous year, producer margins are lower. According to calculations by the Costs team at the Center for Advanced Studies in Applied Economics (Cepea), the estimated revenue in April 2024 was only in line with the operating cost, which means that, when considering the total costs, the margins are negative. In 2023, Cepea's estimates pointed to a positive margin when comparing gross revenue and operating costs. Data released by the National Supply Company (Conab) shows that farmers are not excited to cultivate wheat in 2024. The state-owned company increased the reduction in the area with wheat planned for the current season, to 11.1% over 2023, totaling 3.086 million hectares . Productivity could grow by 26.2% in the same comparison, which would result in ...
Source: CanalRural
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