August 29, 2008

Cold in Brazil's south unlikely to impact wheat

Strong rains and cold weather in Brazil's Rio Grande do Sul state will unlikely impact the wheat crop there because this weekend's cold front is expected to be short-lived, said Odilone Soares DaCosta, an agronomist with the state's rural assistance agency Emater.

"This is a dangerous time to be getting severe cold and we will be faced with cold fronts from now to early October, but this one here doesn't look dangerous," DaCosta said.

Two years ago, the state's wheat crop was destroyed because of a September frost.

Wheat has become an important commodity in Brazil. Short supply has led to food inflation of basic goods like bread, which directly impacts the country's monetary policy. The country's Central Bank has been raising interest rates to curb inflation, most of it due to rising food prices.

Moreover, Brazil is largely dependent on Argentina for half of its wheat supply and Argentina has proven to be an unreliable partner. Argentina has stopped wheat exports to Brazil in order to curb inflation at home as well. As a result, Brazil has been importing from North America, where wheat costs are higher due to the great distances it must travel before arriving in Brazil's heavily populated centre-south region.

Potentially crop damaging 50 to 70 kilometres per hour winds are likely in Rio Grande do Sul on Thursday, with hail likely throughout the state.

Low temperatures are expected to be around one to four degrees Celsius. Frosts are expected in the south and west of the state.