Brazil to sell wheat stocks to boost supply

Brazil's government will sell its entire stockpile of wheat of about 400,000 tonnes, to boost supplies on the domestic market, a source at the government's crop supply agency, Conab, said on Thursday. The wheat, harvested in 2008, will be delivered to the market by August when Brazilian growers will begin harvesting their next crop.
The stocks roughly equate to what Latin America's most populous state consumes in a fortnight. Brazil usually imports substantial quantities of wheat from southern neighbour Argentina, which will have little wheat to spare this year because reduced planting and dry weather have cut yields. Conab wheat specialist Paulo Magno Rabelo told Reuters details of how the government would liquidate its stocks would be decided at a meeting on May 15.
He said sale of stocks could indicate the government is no longer considering suspending a 10 percent tariff on wheat imports originating from outside the South American trade bloc Mercosul, a measure which Brazilian wheat growers oppose. Brazil usually turns to the United States and Canada for imports from outside Mercosul.
But the government is promoting the idea among private buyers of obtaining wheat from Russia, which it has visited to inspect local production. Beside government stocks, Brazilian producers also have inventories of around 450,000 tonnes of wheat still unsold in warehouses in its main wheat state Parana and a further 800,000 tonnes in Rio Grande do Sul state.
Brazil imported 1.6 million tonnes of wheat in the first three months of this year, down from 2.5 million tonnes in that period last year, mainly because its purchases from Argentina fell by 1 million tonnes, the agriculture ministry has said. It bought more than last year from Paraguay and Uruguay, however, and these neighbours should have wheat to sell Brazil as the year goes on.
Rabelo said Brazil would need between 400,000 and 500,000 tonnes of wheat from outside the Mercosul zone and that purchases from Russia were likely only if it could provide hard type wheat better suited to bread making than the soft variety Russia mostly grows. Other sources have estimated the shortfall could be as much as 1 million tonnes.