October 31, 2022
Brazil to purchase wheat from US, Canada, and Russia as supplies from Argentina decline
Analysts said Brazil is expected to purchase wheat from the US, Canada, and Russia as neighbouring Argentina's crop failure has decreased output and affected its ability to export, BusinessWorld reported.
Brazil is a net importer of wheat, and its main source comes from Argentina, which is currently experiencing a drought.
Fabio Lima, a StoneX risk management consultant, said Brazilian imports from Argentina typically amount to 6 million tonnes. However, he now anticipates imports from sources other than Mercosur, the South American trade bloc, to total between 1 and 1.5 million tonnes.
Brazil is one of the biggest importers of wheat in the world, with domestic consumption exceeding 12 million tonnes annually and falling short of its production capacity.
Brazil imported only about 155,000 tonnes of wheat from non-Mercosur nations during the fiscal year 2021–2022, which ended in July.
In contrast, the Brazilian government reports that it bought nearly 900,000 tonnes from the United States, Canada, and Russia the year before.
Along with the drought in Argentina, Parana, a major producer in Brazil, is also experiencing excessive rains, which endangers domestic supplies.
This year, the Mercosur Common External Tariff (TEC) is zero for some imports, including wheat. Brazil also has an annual wheat import quota of 750,000 tonnes that is exempt from tariffs.
Lima said it is challenging to predict how much wheat will be imported from outside Mercosur. He said there are rumours of a possible Russian cargo but was at a loss for words.
Carlos Cogo of Cogo Intelligence said the US, Canada, and Russia were mentioned as potential substitute suppliers for Brazil. However, he warned that purchasing from them would be pricey and might even cause domestic inflation.
Cogo's data show that Argentina has already sold nearly 9 million tonnes of its crop for 2022 to 2023, leaving very few supplies and driving up prices.