en.Wedoany.com Reported - Wheat production in Paraná State of Brazil for the 2026/27 season is projected at 2.2 million tons, while the Brazilian Wheat Industry Association (Abitrigo) estimates that the state's flour mills have an annual milling capacity of 3.85 million tons, leaving a supply-demand gap of approximately 1.6 million tons—the largest wheat supply shortfall the state has ever faced.
Paraná is home to the country's largest flour processing complex, accounting for 30% of national flour output. In the first half of this year, raw grain prices rose, but flour prices failed to keep pace, keeping sustained pressure on flour millers' profit margins.
Paloma Venturelli, president of the Wheat Industry Union of Paraná (Sinditrigo-PR), stated that the flour milling industry is operating under continuous pressure from internal and external variables, with the current cycle being particularly challenging. Rising raw grain prices without corresponding increases in flour prices have squeezed profit margins, directly impacting mill profitability; additionally, the wheat bran market has weakened, and bran is one of the main by-products of milling. She emphasized that the industry needs to pay doubled attention, maintaining competitiveness and operational efficiency without sacrificing quality.
To discuss this situation, and with the state's wheat harvest season approaching, Sinditrigo-PR will hold the ninth "Miller's Coffee Meeting" (Café Moageiro) on August 11 at 8 a.m. at the Rural Society of Paraná (Sociedade Rural do Paraná) in Londrina. The event will bring together flour mills, cooperatives, industry entity representatives, and experts, with a dedicated agenda.
Safras & Mercado analyst Élcio Bento will attend as a speaker, providing an in-depth analysis of the current situation. He noted that Paraná's output contraction mirrors a severe nationwide trend. Brazil's production estimate for this year has been revised down from 7.2 million tons at the start of the year to 5.9 million tons, due to reduced planting enthusiasm, drought in the Cerrado, and crop losses in Minas Gerais and Goiás. Bento expects Brazil to see its largest-ever wheat imports, with volumes estimated at nearly 9 million tons.
Paraná's planted area has shrunk to 740,000 hectares, down 13.5% from 855,000 hectares in the previous cycle. Reduced technical input—driven by higher prices for imported inputs, especially nitrogen fertilizers such as urea—has lowered average yields by 9.5%. The state's production potential has thus fallen by 21%, compared with 2.8 million tons harvested in the previous season.
External dependence is already structural in Brazil's wheat supply chain, and this cycle has made it more acute. Argentina, leveraging logistical proximity and its Mercosur membership, remains the most competitive source, but with significant quality issues. Wheat from the current season, supplying the market through November, has low protein and wet gluten content—a direct result of reduced nitrogen fertilizer application on Argentine farmland. Bento analyzes that Argentina's next harvest remains uncertain, with production estimates near 20 million tons, a volume sufficient to secure supply, provided quality holds up.
Seeking quality from other sources will significantly drive up costs. U.S. wheat prices are approximately 300 reais per ton higher than Argentine wheat, driven by the smallest U.S. harvest since 1970 and the lowest export surplus since 1960 (according to historical data from the U.S. Department of Agriculture (USDA)). Escalating conflict between Russia and Ukraine in the Black Sea region has pushed up freight rates and maritime insurance premiums for cargo and bulk carriers in the Sea of Azov and the Black Sea. Paraguay, a traditional supplier, will also see its export surplus fall from 600,000 tons in the previous cycle to at most 350,000 tons.
The exchange rate is the only factor providing some relief on import costs: with the dollar near 5 reais, dollar-denominated wheat becomes cheaper when converted to reais. But rising international prices have outpaced the relief from exchange rates, leaving import costs higher this season.
Despite currently favorable weather conditions, Bento cautioned that confirmation of a strong El Niño event would add uncertainty to an already damaged situation. Historically, no harvest has escaped quality losses under strong El Niño conditions; if confirmed, supply tightness could intensify further and push up domestic grain prices.
