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Brazil emerges as major market for U.S. wheat

Zoom in font  Zoom out font Published: 2013-08-29  Origin: Food Business News  Views: 23
Core Tip: Brazil has emerged as the second-largest market (after China) for U.S. wheat thus far in the 2013-14 marketing year that began June 1.
Brazil has emerged as the second-largest market (after China) for U.S. wheat thus far in the 2013-14 marketing year that began June 1. The U.S. Department of Agriculture indicated through Aug. 22, exports and undelivered sales of U.S. wheat to Brazil totaled 1,782,500 tonnes, compared with 50,000 tonnes by the same date a year earlier.

Brazil long has been one of the world’s largest wheat importers but has been able to purchase most of its import requirements from neighboring Argentina. Brazil imported 7.4 million tonnes of wheat in 2012-13 and was forecast to import 7.5 million tonnes in 2013-14.

In most years, U.S. wheat exports to Brazil have been miniscule. But Brazil turned to the United States for supply this year because of export restrictions imposed by the Argentine government in response to rising domestic wheat prices in the wake of a drop in wheat production in 2012-13. The 2012-13 Argentine crop was 10 million tonnes, which was the nation’s smallest wheat outturn since 1995-96. The forecast for Argentina’s 2013-14 wheat production was 12 million tonnes. The recent five-year average Argentina wheat outturn was 13.1 million tonnes.

Argentina’s wheat exports in 2012-13 totaled 4 million tonnes, down from 12.9 million tonnes in the previous year. The forecast for Argentina’s 2013-14 wheat exports was 6 million tonnes.

The U.S.D.A. commented in its August Wheat Outlook, “In a populist attempt to keep bread prices low, the (Argentine) government has brought wheat exports to a standstill, and threatened wheat stockholders to revive an obsolete 1974 anti-hoarding law (which involves the confiscation of existing wheat stocks and imprisonment), as well as ordering exporters to sell wheat marked for export to local markets.”

The U.S.D.A. further observed with regard to the outlook for 2013-14, “Government interventions in wheat exports have been detrimental to wheat producers’ planting intentions.” The U.S.D.A. noted the export restrictions that began in June happened “right in the middle of the wheat-planting window in Argentina, where planting begins in the northern parts of the country at the beginning of May and moves toward the south, ending in August in the largest wheat-producing Buenos Aires region. Despite good planting conditions in the south, uncertainty about government interventions and export policy caused a drop in the projected area partly in favor of barley.”

The International Grains Council in its most recent Grain Market Review said, “With limited availabilities from Argentina, Brazil has turned to other origins to meet its needs, aided by the suspension of the 10% duty on non-Mercusor imports until Aug. 31. Brazil’s demand for U.S. wheat has been particularly strong and has contributed to stronger early-season U.S. sales than expected.”
 
 
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