Brazil may import more: North American wheat after frosts

Frost that hit the wheat crop in Brazil's leading producer state Parana this week will likely force the country to import more than the 2 million tonnes of wheat it has bought from North America, even with tariffs, Brazilian buyers said. Local meteorologists Somar and Simepar reported multiple days of frost over the heart of that country's wheat growing regions this week. In addition, they say more frost could hit Parana wheat areas on Thursday.
Early in July, the Agriculture Ministry forecast that Parana would produce 2.7 million tonnes of wheat, almost half of Brazil's expected total output of 5.6 million tonnes. Brazil has an annual wheat demand of 11 million tonnes. An official at the Agriculture Ministry said on Wednesday that no decision has been taken at this time to expand the quota and the ministry is monitoring the situation.
Most of its wheat imports come from Argentina but limited output and government export curbs there have forced Brazil to set a 2-million-tonne quota to buy North American wheat to help make up for the shortfall from Argentina. Traders say Brazil has already exhausted that quota. "It's most likely that this cold snap will have a big impact and we will have to import quality wheat to blend," a trader in Campo Mourao, an important agricultural region in Parana where the skies cleared on Tuesday favouring the formation of frost.
The trader who declined to be named said the frost damage to the Parana crop could prompt Brazil to import an additional 1 million tonnes of wheat this year, considering the vulnerability of that state's crop to frost. Analysts say Brazil has already exhausted surplus wheat supplies in the Southern Cone, including fellow Mercosur trade partners Argentina, Uruguay and Paraguay. Earlier this year, the government - recognising the potential shortfall - exempted 2 million tonnes of non-Mercosur wheat from a 10 percent common import duty that is normally applied to grain originating from outside the trade block. Brazil typically turns to North America when it needs to import wheat from beyond the region.