Brazil wheat production drops, government may scrap wheat import tariff
Brazil wheat production drops, government may scrap wheat import tariff
(Agricultural Wealth Network) Market analysts speculate that the Brazilian government may scrap tariffs on wheat imported from outside Mercosur, because heavy rain in Brazil's main wheat-producing regions has severely damaged the wheat crop.
The wheat crop in Parana state, Brazil's main wheat-producing region, suffered a poor harvest, with output of only 2.8 million tons, 20% lower than earlier expectations, prompting agricultural groups to lobby Brazil's Ministry of Agriculture to scrap 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 planting more profitable soybean crops have caused Argentina's wheat supply to plunge sharply.
According to the Buenos Aires Grain Exchange in Argentina, Argentina's wheat production this year is projected 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 export supply is only 1.25 million tons.
Analysts pointed 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 said 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 about 7 million tons, compared with 4.7 million tons the previous year.
The wheat crop in Parana state, Brazil's main wheat-producing region, suffered a poor harvest, with output of only 2.8 million tons, 20% lower than earlier expectations, prompting agricultural groups to lobby Brazil's Ministry of Agriculture to scrap 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 planting more profitable soybean crops have caused Argentina's wheat supply to plunge sharply.
According to the Buenos Aires Grain Exchange in Argentina, Argentina's wheat production this year is projected 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 export supply is only 1.25 million tons.
Analysts pointed 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 said 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 about 7 million tons, compared with 4.7 million tons the previous year.