October 3, 2003



Brazil Buys 60,000 Tons US Wheat


Brazilian flour mills clinched two deals this week to buy a total of 60,000 tonnes of mostly U.S. soft wheat, as interharvest prices rise in Argentina, traders said on Thursday. "There were two deals, of cape-sized ships, for the Northeast, around 30,000 tonnes each," said a trader at a multinational grain trader in Sao Paulo. "The old crop in Argentina is very expensive with little available."


The mostly U.S. soft wheat costs about $185 a tonne cost and freight.


A tonne of Argentine wheat on Thursday was quoted at $183 cost and freight northeast Brazil, up $10 from June. Traders said that when U.S. and Argentine prices are similar, Brazilian buyers prefer to take U.S. wheat because its quality is higher and the shipment is shorter.


Another trader at a national company, said after a lull of about a month, Northeast mills were turning to the United States and the situation would persist until December.


"These prices are putting American wheat back on the market," the national trader said. "It's very probable the setting will remain the same until the entrance of the new crop in Argentina in December."


He added that Brazil had bought about 460,000 tonnes of U.S. wheat from January through September, compared with 670,000 tonnes for all of 2002.


But, Brazil should import less foreign wheat this year due to its bumper crop which is seen passing 5 million tonnes. Drought, frost and late rain drove the 2002 crop down to 2.9 million tonnes.


Brazil has been the world's largest wheat importer bringing in about 7 million tonnes annually in recent years but could give up this title this year due to good weather for its southern crop.


Brazil buys over 90 percent of its imported wheat from Argentina but also takes small lots of hard wheat from other origins like the United States to mix into its commercial flours.


"The national crop still lacks uniform quality and has a lot of soft wheat. As most of the flour in Brazil goes to bakeries, it's necessary to mix in imported wheat to keep the product quality stable," said the local trader.


In its latest report on Thursday, the U.S. Department of Agriculture registered a purchase of 32,000 tonnes of U.S. wheat by Brazil. The two deals closed this week should appear in a later USDA report.
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