War in Ukraine makes Brazil stand out in wheat exports

The conflict between Russia and Ukraine, which erupted in February, altered the international wheat landscape. With the dispute involving two of the world’s largest cereal producers, the price of wheat soared from US$ 7 to US$ 11 per bushel, allowing Brazil to gain space in the market. In this sense, in just one semester, Brazil, formerly an importer of wheat, has already surpassed the number of exports carried out in previous years.

According to the content director of Canal Rural, Giovani Ferreira, from 2018 to last year, shipments never reached 1.3 million tonnes. However, in the first half of 2022 alone, exports stood at 2.51 million tonnes of wheat.

“As of right now, we already exported almost twice as much wheat as last year,” noted Ferreira. “But, why are we exporting a lot of wheat this year? Because of the war in Eastern Europe. Russia and Ukraine — Eastern Europe as a whole — are major wheat producers. Since the supply from this region has gone down, prices have gone up. That is the law of supply and demand,” he explained.

Please see below a graph showing the wheat export figures in the first months of 2020, 2021, and 2022. Data are from DataLiner.

Brazilian wheat exports | January – April | 2020 – 2022 | WTMT

Source: DataLiner (click here to request a demo)

According to the person in charge of ‘AgroExport,’ the struggle between Ukrainians and Russians was also responsible for initially raising the price of wheat on the international market. Before the onset of the war in Europe, the price of a bushel was US$7, but it has now soared to over US$11. These figures piqued the interest of Brazilian producers, though it is no longer sustainable in the long run, said Ferreira.

“The price has dropped,” emphasized the content director of Canal Rural. “Wheat is falling in the international market this July, trading for less than $9 a bushel. This is already reducing Brazil’s desire to sell the commodity,” commented him. “The domestic market may become more attractive in this incoming second half,” said Ferreira.

Wheat: more exports and… more imports

The volume shipped during the first half of this year is noteworthy because Brazil has historically been a wheat importer. Consequently, according to Giovani Ferreira, the government had to expand its cereal imports to meet domestic demand. In this line, he stated that 3.5 million tonnes of the commodity were imported in the first half of 2022.

“From 2018 to 2021, wheat imports by Brazil neared 6 million tonnes,” stressed Ferreira. “In 2022, by June, we had already absorbed 3.5 million tonnes, which indicates that we should break an import record in the year, exceeding 7 million tonnes. We exported too much wheat. It wouldn’t come as a surprise if we had to import wheat to meet domestic demand,” stressed the content director of Canal Rural.

Source: Canal Rural

To read the full original article, please go to: https://www.canalrural.com.br/noticias/agricultura/trigo/com-guerra-na-ucrania-brasil-se-destaca-na-exportacao-de-trigo/

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