Brazil’s Wheat Trade Increases Along With Consumption
3 April 2012 Brazil’s 2011/12 wheat imports are estimated 7.1 million metric tons (mmt), a 6% increase from 2010/11 due to an increase in domestic consumption.
Brazil historically has produced enough wheat to meet only half of its consumption needs, according to the report. Argentina, Uruguay and Paraguay typically account for 98% of Brazil’s wheat imports.
The United States has been the primary back-up supplier in years when the Mercosul countries cannot meet Brazil’s import needs. The Mercosul economic agreement between Brazil, Argentina, Uruguay and Paraguay promotes free trade between those countries. US wheat typically enters Brazil to supply millers in the Northeast, where it can compete due a waiver on the merchant-marine tax.
USDA forecasts Brazil’s wheat exports for 2011/12 at 1.8 mmt. Last year’s wheat exports were a record high, and exports, while 29% lower from the year before, are estimated to reach the second-highest level on record.
Wheat exports will continue to be strengthened by Brazilian government support through the Premium for Product Outflow Program (PEP).
Wheat production area is forecast at 2.2 million hectares, up 9% from 2011/12. Wheat area is forecast to recover some land from soybeans in Rio Grande do Sul and Santa Catarina. The USDA report forecasts that wheat production will continue its shift further south and Rio Grande do Sul will overtake Paraná to become the largest wheat producing state.
Brazil’s wheat production is forecast at 6.1 mmt, up 7% over 2011/12, according to the report. Domestic wheat should continue to improve in quality for two reasons:
– Production area shifts to the South should provide a more conducive growing climate
– Anticipation that Brazil’s new flour fortification standards will enter into force.
The new flour fortification standards call for better wheat characteristics, encouraging producers to invest in better seeds. The standard is scheduled to begin enforcement in July 2012.
However, the USDA indicates as the new standard remains an ongoing discussion among producers, millers and the government, it is likely that the standard implementation will be postponed for a third and final time to 2013.
Source: USDA, Edited by Stefanie A. Toth, Online Editor
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