Brazil To Buy US, Canadian And Russian Wheat As Argentina Suffers Severe Wheat Production Cuts

As wheat production in neighbouring Argentina, the number one supplier, is severely reduced, Brazil will need to seek alternative supplies, potentially importing wheat from the US, Canada and Russia.

Brazil is expected to produce a good wheat crop this year, but will still need to import wheat. Argentina has traditionally been Brazil's top wheat supplier, as it is part of Mercosur, and no duties are paid on imports of Argentine wheat.

Generally speaking, Brazil imports about 6 million tonnes from Argentina, said Fabio Lima, a risk management consultant at consultancy StoneX. But it is now estimated that Argentina will import between 1 million and 1.5 million tonnes of wheat from countries outside Mercosur.

On 5 October, StoneX forecast Brazil's 2022/23 wheat production to reach a record 10 million tonnes, up 21 per cent year-on-year; wheat export forecasts were raised to 2.8 million tonnes from 2.5 million tonnes; wheat import forecasts were unchanged at 6.2 million tonnes, up 2 per cent on the previous year. on 6 October, the National Commodity Supply Company of Brazil (CONAB) forecast 2022/23 Brazilian wheat production will reach 9.4 million tonnes, up 22% from the previous year; wheat imports were revised down to 6.1 million tonnes from 6.3 million tonnes.

Brazil is the largest economy in South America, with a population of 210 million. With an annual domestic wheat consumption of over 12 million tonnes, it is also the world's leading wheat importer, which is the only agricultural product that requires net imports in this world agricultural powerhouse.

In 2021/22 (August to July), Brazil imports only 155,000 tonnes of wheat from countries outside of Mercosur. In 2020/21, Brazil imported almost 900,000 tonnes of wheat from the United States, Canada and Russia.

According to the latest estimates from the Rosario Grain Exchange, Argentina's wheat production this year is estimated at 13.7 million tonnes and is likely to fall further to 12.5 million tonnes, well below the previous year's record production of 23 million tonnes. Argentina has so far pre-sold almost 9 million tonnes of wheat for 2022/23, meaning that there is limited additional volume available for export.