Brazil Ramps Up Russian Wheat Imports Amid Weak Argentinian Harvest

Brazil’s wheat imports from Russia is expected to rise this year as competitive prices are set to help the Latin American nation partially replace lost volumes from Argentina, the harvest season of which is forecast to be weak in 2022-23. Brazil has been looking for alternatives to supplies from Argentina, which have plunged to a multi-year low of 122,500 tons in OCtober from 475,000 tons a year earlier. Meanwhile, imports from the United States have soared, totaling 101,200 tons in October up from just 16,500 tons in October last year. Other than the U.S., Russian wheat has also made a return to the Brazilian market after a break of a few years. Russia exported 31,100 tons in October, and two vessels carrying 61,500 tons are also on their way to the South American nation. A further 38,300 tons of Russian wheat is also earmarked for Brazil.

Including October’s deliveries, Brazil has so far imported a total of 130,900 tons of wheat in 2022-23, already closing in on the previous record in 2019-20 when it imported a total of 171,400 tons. By the end of the marketing year, Brazil is expected to buy a record volume of 240,000 tons of wheat from Russia.

Despite higher freight rates of importing from Russia, currently buying wheat from there is cheaper for Brazil than buying from Argentina. On a cost, insurance and freight (cif) Brazil basis, Russian wheat would be $22/t cheaper than its Argentinian equivalent.

The price difference between two is even wider on a free on board (fob) basis. Russia’s spot 12.5% protein content wheat is at $316.50/t, or $63.50/t cheaper than Argentina’s spot 12% crop.

Despite price advantages, Brazilian mills are concerned about shipment delays fro Russian wheat. Some millers say they could wait up to 15 days for some ships.

Another barrier could be Brazil’s wheat import quotas outside Mercosur countries, under the free trade agreement. Brazil can import a maximum of 750,000 t/yr of tariff-free wheat from countries outside Mercosur. Some of this quota is likely to be used for imports of high-protein wheat from Canada and the US, which is then blended with domestic lower-protein crops or those from other origins.

Brazil usually imports between 6-6.5 million tons of wheat every year, and Argentina is its biggest supplier. The geographical proximity and both countries being Mercosur members make Argentinian wheat cheaper and thus, more favorable.

Argentina’s share in Brazilian wheat imports had reached 86% in 2021-22 thanks to a bumper harvest. Brazil received 5.13 million tons of wheat from its southern neighbor over the entire marketing season (October-September).

Bad weather conditions in 2022 have weighed heavily on the prospects for Argentina’s 2022-23 wheat production, which is forecast to be as low as 11.8 million tons, down by around 10 million from a year earlier. This could result in the country’s exportable supply falling below 6 million tons.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

IPOs Broke Records in 2021, But the Stock Performance Disappoints

Although initial public offerings (IPOs) around the world raised a record $594 billion in 2021, they often disappointed investors with their subsequent stock performance. Many companies benefited from investors’ appetite for risk emanating from low interest rates and re-opening of economies after Covid-19 lockdowns. 

Xi Set to Tighten Control Over China’s Financial System

Chinese President Xi is set to tighten grip on the country’s decision making of the financial system with the likely re-establishment of a powerful state committee, Central Financial Work Commission, to coordinate financial policy and the possible appointment of a key ally in a top position at the People’s Bank of China (PBOC), the country’s central bank. The authorities are looking to revive the commission to allow the Communist Party to gain more control over the financial policy. Xi’s chief of staff Ding is expected to become the head of the revived entity.  

Russia, China Close to Making Coal Supply Agreement

Russia and China are working on an agreement that will supply China with 100 million tonnes of Russian coal. 

Stay informed

error: This content is protected !!