May 17, 2007

Low wheat supply may affect Brazil's wheat prices

Market analysts foresee high prices of Brazilian wheat in the next two years if wheat supplies worldwide and in Brazil continue to dwindle.

Wheat prices in Brazil's largest wheat producer Parana state has the grain prices risen 50 percent on average over the same period last year, according to analyst firm Safras and Mercado. A tonne of wheat in Paran¡§¢ is being parlayed between R$500 (US$248.76) and R$510 (US$253.73), above the R$400 (US$199) minimum price.

The jump has caused the price of wheat by-products bread and macaroni to rise between 8 percent and 10 percent this year, according to the president of the Brazilian Association of Pasta Industries (Abima), Eliane Kay.

The Wheat Industry Association of the State of São Paulo (Sindustrigo) forecasts that an average of 14 percent of the costs this year will be passed on to the retail level.