“Normally, Brazil receives about 6 million tonnes from Argentina,” said Fabio Lima, risk management consultant at StoneX. But now they expect to import 1 to 1.5 million tonnes from outside Mercosur.
Brazil is one of the largest importers of wheat in the world, with domestic consumption exceeding 12 million tonnes per year.
In the context of the 2021-2022 business year ending in July, Brazil imported about 155,000 tonnes of wheat from non-Mercosur countries. In return, last year it bought about 900,000 tons from the United States, Canada and Russia, according to government figures.
In addition to drought in Argentina, Paraná, Brazil’s main producer state, is facing excessive rainfall, which is also compromising domestic supplies.
This year the Mercosur Common External Tariff is zero for imports of certain products, including wheat. Brazil also has an annual wheat import quota of 750,000 tonnes which is exempt from tariffs.
Lima said it was difficult to estimate the amount of wheat coming from outside Mercosur. He cited rumors of a possible shipment from Russia, but could not elaborate.
Carlos Cogo of Cogo Intelligence cited the United States, Canada and Russia as potential alternative suppliers to Brazil. But he warned that buying from them would be costly, which could lead to higher domestic inflation.
Argentina has already sold about 9 million tonnes of its 2022-2023 crop, according to Cogo data, leaving little extra supplies and pushing up prices.