May 15, 2008

Brazil expands duty free wheat imports as Argentinean supplies choked off

US and Canadian wheat exporters are likely to benefit from a decision by Brazil to allow two million tonnes of wheat into the country duty-free.

Brazil's Foreign Trade Council decided on Wednesday (May 14, 2008) decided it will allow two million tonnes of wheat into the country duty-free, due to the stoppage of wheat exports from Argentina, its main wheat supplier.

Exports from Argentina have slowed to a trickle as farmers on strike blockaded roads leading to ports, choking off grain exports.

Argentina has promised to reopen its export registry and allow for new wheat orders from Brazilian buyers, but wheat millers here have complained that the volumes promised either never arrived or were too low.

Thanks to Mercosur, the regional trade agreement, Argentinean wheat enjoys duty-free status in Brazil.

With Argentinean wheat out of the market, US and Canadian wheat exporters would be able to avoid the 10-percent tax normally imposed on wheat imports.

Traders have until July 31 to place orders.

Brazil already permitted one million tonnes back on Feb. 29 because of strikes in Argentina. Brazil's wheat harvest does not begin until late September.