Argentina set to double wheat sales to Brazil on rebounding crop

Source:  Buenos Aires Times
Аргентина

Argentina is poised to more than double its shipments of wheat to Brazil, displacing competitors including Russia in the key global agriculture market.

Shipments of the grain commonly used in Brazilian favourite “French rolls” are likely to average 450,000 metric tons per month in 2024, according to Brazilian trader Serra Morena SA. That would push total annual trade to exceed five million tons and put it near historical highs. The outlook compares with about 188,000 tons a month so far this year and annual shipments of roughly two million, trade data through October show.

Argentina — a top global wheat supplier whose biggest customer is neighbouring Brazil — is expected to benefit from a partial rebound in domestic output after the worst plunge in more than three decades last season led the government to take measures to ensure domestic supplies. The drop impacted the amount of supply available to ship through 2023.

Meanwhile, farmers in Brazil, which typically relies on imports for roughly half of its consumption needs, are faced with the lowest crop yields in six years due to excessive rains caused by the El Niño weather phenomenon.

Bigger crops from Argentina will add further pressure to the world wheat market that’s already dealing with abundant supplies from top exporter Russia. Wheat futures traded in Chicago are down about 20% in 2023.

Argentina wheat output is seen growing 20 percent this year to 14.7 million metric tons, according to Buenos Aires Cereals Board of Trade. In Brazil, production is seen dropping 23 percent from the previous season, according to the National Supply Company.

In Brazil, Latin America’s largest economy, Paraná state-based wheat processor Infasa Industria de Farinhas SA expects to double purchases of Argentine cereal next year, while Cooperativa Agraria Agroindustrial Ltda plans to triple imports, according to representatives for the companies.

Increased supplies from its neighbor means Brazil is likely to turn away from Russia, which helped fill the supply gap left by Argentina during its output crunch. Prices for Argentine wheat, which can be exported into Brazil with no tariffs under the trade bloc Mercosur’s rules, should remain competitive with those for Russian supplies at least until May, according to Serra Morena’s Walter Von Muhlen.

“From mid-year onwards, buyers may look again at crops in North Hemisphere,” Von Muhlen said.

Tags: , , , , , , , ,

Got additional questions?
We will be happy to assist!