October 29, 2003

Brazil Suspended Sales of New Wheat Crop in Protest of Low Prices
 

Grain cooperatives in Brazil's No. 2 wheat growing state, Rio Grande do Sul, said on Monday they have suspended sales of the new wheat crop in protest of low prices and that the government has failed to support producers.

Rui Polidoro Pinto, president of Rio Grande do Sul's Cooperative Federation (Fecoagro) said producers had expanded state output in accordance with the government program to boost national production.

"We cannot abandon the producers now," said Pinto.

Pinto said flour mills were offering to buy wheat below the minimum price set by the government, of 400 reais per ton of top quality soft wheat. However the government has yet to fund programs to support the price of wheat or its producers.

Fecoagro cooperatives, responsible for 60% of the states wheat sales, are asking the government to free the funds for minimum price put options and farm credits such as EGF loans, which are granted at a fixed annual interest rates far below commercial rates.

Rio Grande do Sul is entering the peak of its winter wheat harvest, which should produce 1.9 million tons.

One wheat trader in the state said cooperatives were effectively not closing contracts, instructing producers to hold on to their crops.

"They are asking those who can to wait, to store the product in silos," said the trader, who said a tonne of wheat in the interior of state was quoted at 350 reais on Monday. Ex-mill a tonne was quoted at 380 reais.

Brazil has been the world's No. 1 wheat importer in recent years, bringing in nearly 7 million tons annually, but analysts said the bumper crop harvest could cause Brazil to lose that title.