February 4, 2005

 

 

Brazil wheat imports from Argentina to hold steady in first half 2005

 

Brazilian wheat purchases from Argentina are likely to hold steady in the first half of 2005, according to the Brazilian Wheat Millers Association, or Abitrigo.

 

"The flow of Argentine wheat will continue to be smooth. We will see little change in this year's figures compared with last year," said Francisco Samuel Hosken, the president of Abitrigo.

 

He rejected observations by Argentine exporters that Brazilian purchases were slow in the second half of 2004. In fact, local millers imported 2.28 million metric tons of wheat from neighboring Argentina in the second half of last year, only slightly down from 2.35 million tons in the first half of the year. However, imports have dropped sharply since the first half of 2003 owing to a jump in local wheat production, he added.

 

"Import demand has fallen in the last couple of years, but that is natural as local farmers have been encouraged to plant," he said.

 

Brazil produced 5.85 million tons of wheat in 2004, almost the same as the year before but roughly double the 2.91 million tons produced in 2002, according to Agriculture Ministry figures.

 

As a result, wheat imports fell sharply last year to 4.85 million tons from 6.61 million tons in 2003.

 

Imports picked up in November and December, showing returning interest in importing after a post-harvest lull, said Hosken. In the eleventh month of the year, Brazil imported 375,179 tons of wheat, 5% higher than November 2003. December imports totalled 411,007 tons, down 12% on the year.

 

Abitrigo forecasts 2005 imports could actually rise in the second half of the year. This as the 2005 Brazilian crop promises to be smaller owing to rock bottom prices and high producing costs.

 

"We may see production drop to 4.0 million to 4.5 million tons next year or even lower if the weather is bad," said Aldo Lobo, wheat analyst at the local Safras e Mercado agricultural consultancy.

 

Argentina is the main supplier of wheat to Brazil, accounting for 95.4% of shipments last year, and will remain so for the near future, according to Hosken

 

The two countries are partners in the Mercosur trade block and Argentine wheat imports are exempt from tariffs. As a result, U.S. wheat can cost up to US$100 per ton more than Argentine wheat.

 

Record wheat production in neighboring Argentina has forced Brazilian exporters to turn more to Asian and African markets, which have been neglected in recent years.

 

Argentina has sold some 5.7 million tons of wheat so far in the 2004-05 season, well above the 3.08 million tons sold up to the same date last year.