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U.S. Brazil's main wheat supplier

Staff writer ▼ | December 17, 2013
On an annual basis, Brazil consumes roughly 10 million tons of wheat, but the country is able to grow only 4.2 million tons because of crops destroyed in the winter.
US wheat
US wheatOn an annual basis, Brazil consumes roughly 10 million tons of wheat, but the country is able to grow only 4.2 million tons because of crops destroyed in the winter.


In addition, Argentina, Brazil's Mercosur partner, has the lowest wheat output in 100 years, due to drought. Argentina is able to export no more than 2.5 million tons due to bad weather government limitations on the international trade of grains. In 2013, the U.S. is expected to sell 3 million tons of wheat to Brazil. Last year, the U.S. exported just 32,000 tons to the South American country.

A tax exemption that started in April has benefited the U.S. and other countries outside of the Mercosur. It offers wheat to Brazil without a 10% import tax. So far, however, the U.S. has been the only country with the quality of grain approved by Brazilian authorities and local importers, who need mostly hard red winter wheat.

The trend of- increased U.S. wheat exports to Brazil is expected to remain, because the Mercosur countries have a stock of only 6 million tons, while Brazil would need to import 7 million tons, according to a projection by Safras & Mercado, a consultancy based in Porto Alegre.

Brazil has extended, through December, the exemption for wheat imported outside of the Mercosur. The current import quota is 2.7 million tons. Mills located in the northeastern part of the country, the main entrance for U.S. wheat, have already lobbied for more U.S. wheat.

The Mercosur bloc is expected to produce 18.5 million tons of wheat this year. The forecast before the winter frosts in the region were for about 21.5 million tons.


 

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