São Paulo – Brazil exported 1.1 million tons of wheat last year, half of what the country exported in the previous year, and expectations for 2014 are not high. “We are going to export less wheat than in 2013,” stated Agriculture Economics professor at the Federal University of Paraná (UFPR), Eugênio Stefanelo. In spite of being an importer of this product, with a production that is lower than the demand, the country sells abroad part of the wheat for which there is no consumption in the domestic market. They are varieties used mainly to make biscuits, which in the Brazilian market is not as strong as the bread bakery segment.
Information from the Brazilian Wheat Industry Association (Abitrigo) show that four Arab countries imported Brazilian wheat last year: Egypt, with 65,800 tons; Saudi Arabia with 62,400 tons; Tunisia with 18,200 tons and the United Arab Emirates which imported 12,500 tons of wheat. The greatest importers, however, were Spain, South Africa, South Korea, Israel and Germany, in this order. Brazilian wheat exports are concentrated in the beginning of the year, since harvest season in the southern region of the country, where most of the grain is produced, happens in the second semester, ending the crop’s cycle between December and January.
According to Stefanelo, the drop in exports in 2013 can be explained by the wheat prices in the domestic market. When there is excess supply in the South of Brazil and prices fall below the established minimum, the government gives incentives for the region to sell to other states or export the product. This occurred in 2012, when exports reached 2.2 million tons. Part of foreign sales in the beginning of 2013 were a reflex of that situation. During the year, however, prices went up, above the minimum, and after May Brazil exported very little: 42,000 kg in June; 1,000 tons in November and 8,300 tons in December.
Wheat prices went up in the second semester of 2013 because Argentina, one of Brazil’s greatest suppliers of the product, reduced exports due to harvest problems. It was only on the last week of the year that the Argentine government cleared exports of 1.5 million tons of wheat. While sales in the neighbor country were restricted, the Brazilian market sought wheat from other suppliers, such as Canada, USA, Paraguay and Uruguay.
To avoid further increases in the price of wheat and, consequently, in the price of bread in Brazil, putting pressure on inflation, the Brazilian government cancelled the Common External Tariff (TEC) in wheat imports this year. The tax went from 10% to 0% for a volume of 3.3 million tons. This affected Brazilian producers’ profitability forecasts, who expected higher prices. “We expected to have good profits, due to the lower world supply, which has not been confirmed,” says the technical analyst at the Agriculture Federation of the State of Paraná (Faep), Tânia Moreira.
The possibility of higher profitability led Brazilian wheat producers to increase the crop area in the 2013/2014 harvest by 15.7%, according to information from the National Food Supply Company (Conab). In the southern state of Paraná, Brazil’s greatest wheat producer, the crops are planted around April and harvested between August and December, whereas in Rio Grande do Sul it goes on until January, according to Moreira. National production is expected to reach 5.4 million tons, an increase by 24.9% in relation to the previous harvest.
The next Brazilian wheat harvest, 2013/2014, is still uncertain. But the beginning of this year will probably not be marked by great volumes in exports, since with prices above the minimum, producers won’t be rewarded by selling to the international market. But the 2013/2014 harvest has not been entirely sold yet. According to the Faep technical analyst, the state of Paraná still has 25% of it’s harvest and Rio Grande do Sul has an even greater share for sale.
*Translated by Silvia Lindsey
