High prices curb Brazilian wheat exports

Despite the prospect of an all-time high output this year, coupled with supply problems in the northern hemisphere, Brazilian wheat is unlikely to gain space in the international market. The reason for this is that prices in December, the month when the current crop will be harvested, tend to be one of the most expensive in the world. Such a scenario is negative for exporters and domestic consumers alike.

See below the track record of wheat exports and imports from Brazil in the period between January 2021 to June 2022. The data is from DataLiner.

Brazilian Exports and Imports of Wheat (HS 1001) | Jan 2021 – Jun 2019 | WTMT

Source: DataLiner (click here to request a demo)

A study by the consultancy T&F indicates that Rio Grande do Sul producers will invoice R$ 102 per bag and that the FOB price (at the port of Rio Grande) will reach US$ 385 per tonne, considering transportation costs and a Dollar-Real exchange rate of BRL 5.08/Dollar.

At this level, says Luiz Carlos Pacheco, a partner at T&F, Brazilian wheat would reach Algeria, for example, a major importer, costing US$ 465, above the wheat produced in Argentina (US$ 450), Canada ($416), the US ($408, durum wheat), France ($383), and Russia ($315).

“To have export outlets, the over-the-counter price [the price paid to the producer] would have to be R$ 88 per bag, which is inconceivable given the high production costs,” he explains. As a result, the large Brazilian crop, estimated at more than 9.2 million tonnes by the National Supply Company (Conab), should be consumed almost entirely on the domestic market.

Source: Valor Econômico

To read the full original article, please go to: https://valor.globo.com/agronegocios/noticia/2022/08/18/preco-elevado-do-trigo-inibira-exportacao.ghtml

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