Brazil's government will provide financial support to local wheat sales after a record domestic crop depressed prices and market activity, Agriculture Policy Secretary Neri Geller told Reuters on Wednesday. Geller said the government would spend around 150 million reais ($43.8 million) in programs to help farmers to sell up to 1.7 million tonnes of wheat to the local food industry.
Brazil, traditionally a net importer of wheat, is harvesting its largest ever wheat crop of 6.3 million tonnes. The large supply has sent prices below the government's guarantee price of 38.65 reais per 60-kg bag. Under such circumstances, the federal government usually offers financial incentives to stimulate deals. "As soon as the support measure is published in the official gazette, I will release the rules for it," Geller said.
Poultry and pork producers in southern Brazil have increased the proportion of wheat in animal feed versus costlier corn, but experts have noted that there was a limit on how much wheat could be used. Geller said the trend would boost demand for recently harvested wheat and reduce the need for new corn sales from government stocks. There are no current plans for new corn sales, he said.
Geller also said he was negotiating with the Finance Ministry for the approval of an additional 2.1 bln reais in subsidised credit for producers to finance agricultural machinery purchases under the Moderfrota program run by Brazil's development bank BNDES.
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