January 12, 2007

Brazil will have to pay more for wheat this year

With Brazil's small production of wheat expected to fall further to just 2.2 million tonnes this year against a domestic consumption of 10.3 million tonnes, the country might have to import most of the grain at high prices.

In 2006 the price of wheat in the foreign market surged. The average price in Chicago rose from US$318.2 cents per bushel in 2005 to US$402.03 cents per bushel in 2006. This upward trend was due to the lower harvest already observed for 2007, due to the decline in productivity of the main grain producing countries.

Considering this scenario of tight supply, the price might rise on average 20 percent reaching almost US$482.57 cents per bushel.