Brazil wheat production drops, government may scrap wheat import tariff
Brazil wheat production drops, government may eliminate wheat import tariff
Market analysts speculate that the Brazilian government may eliminate the tariff on wheat imported from outside Mercosur, because heavy rain in Brazil's main wheat-producing regions has severely damaged the wheat crop.
The wheat harvest in the main wheat-producing region of Parana state in Brazil was poor, with output of only 2.8 million tons, 20% lower than earlier expectations, prompting agricultural groups to lobby Brazil's Ministry of Agriculture to eliminate the wheat import tariff.
Brazil currently levies a 10% wheat import tariff on countries outside Mercosur.
Although Brazil usually imports wheat from Argentina to meet domestic demand, persistent drought in Argentina's wheat-producing regions and farmers switching to soybean crops with higher returns have caused Argentina's wheat supply to plummet sharply.
According to the Buenos Aires Grain Exchange in Argentina, Argentina's wheat production this year is estimated at 7.75 million tons. This is far below the five-year average of 14.8 million tons. Domestic wheat demand is about 6.5 million tons, which means wheat export supply is only 1.25 million tons.
Analysts point out that Brazil's wheat imports from countries outside Mercosur could surge to 2 to 3 million tons, which would provide a good opportunity for North American producers. Analysts say that given Argentina's sharp wheat production decline and Paraguay also suffering the same severe weather as Brazil, Brazilian traders may import wheat from the United States and Canada.
According to the U.S. Department of Agriculture, Brazil's wheat supply-demand gap for 2009/10 is estimated at around 7 million tons, compared with 4.7 million tons the previous year.
The wheat harvest in the main wheat-producing region of Parana state in Brazil was poor, with output of only 2.8 million tons, 20% lower than earlier expectations, prompting agricultural groups to lobby Brazil's Ministry of Agriculture to eliminate the wheat import tariff.
Brazil currently levies a 10% wheat import tariff on countries outside Mercosur.
Although Brazil usually imports wheat from Argentina to meet domestic demand, persistent drought in Argentina's wheat-producing regions and farmers switching to soybean crops with higher returns have caused Argentina's wheat supply to plummet sharply.
According to the Buenos Aires Grain Exchange in Argentina, Argentina's wheat production this year is estimated at 7.75 million tons. This is far below the five-year average of 14.8 million tons. Domestic wheat demand is about 6.5 million tons, which means wheat export supply is only 1.25 million tons.
Analysts point out that Brazil's wheat imports from countries outside Mercosur could surge to 2 to 3 million tons, which would provide a good opportunity for North American producers. Analysts say that given Argentina's sharp wheat production decline and Paraguay also suffering the same severe weather as Brazil, Brazilian traders may import wheat from the United States and Canada.
According to the U.S. Department of Agriculture, Brazil's wheat supply-demand gap for 2009/10 is estimated at around 7 million tons, compared with 4.7 million tons the previous year.