Miller Magazine Issue: 156 December 2022
30 MILLER / DECEMBER 2022 NEWS In its latest Grain: World Markets and Trade report, USDA forecasts Brazil wheat production in the 2022-23 season at 9.4 million tons. Thanks to its re- cord supply, Brazil wheat imports are slashed to 5.9 million tons—the lowest in 8 years. While Brazil is a large wheat producer, it still relies on imports to satisfy demand from its milling sector, especial- ly in northern states where wheat is not grown. Its largest supplier is Argentina, which captured nearly 90-percent market share last year. Argentina’s wheat crop, however, is expected to shrink dramatically in 2022/23 and ex- ports are forecast to decline by over 40 percent from the prior year. The steep devaluation of the Brazilian real has also impacted traders’ ability to purchase dollar-denominated wheat. With the real currently trading at R$5.04/USD and domestic supplies expanding, mills are less willing to buy international wheat. With elevated global wheat prices and a devalued currency, selling for export has become an attractive revenue opportunity for Brazilian farmers and traders that partially offsets increased production costs. “Ex- ports will reach record levels for the second year in a row, forecast at 3.5 million tons for 2022/23,” USDA said. “In 2021/22, constrained supplies from the Black Sea allowed Brazil to take advantage of strong demand in the Middle East, Southeast Asia, and North Africa. Ex- ports to top destination Saudi Arabia, for example, were nearly five-fold higher than 2020/21.” Although Brazil only accounts for a small portion of global wheat trade, its relatively affordable supplies will partially offset large declines in exports from Argentina and India in 2022/23. Brazil wheat imports may fall to 8-year low as production expands MARKET FEATURES Brazil Imports Decline as Production Expands Brazil wheat production is forecast at a record 9.4 million tons in 2022/23 on improved yields. With ample domestic supplies, imports are slashed to 5.9 million tons—the lowest in 8 years. While Brazil is a large wheat producer, it still relies on imports to satisfy demand from its milling sector, especially in norther states where wheat is not grown. Its largest supplier is Argentina, which captured nearly 90-percent market share last year. Argentina’s wheat crop, however, is expected to shrink dramatically in 2022/23 and exports are forecast to decline by over 40 percent from the prior year. The steep devaluation of the Brazilian real has also impacted traders’ ability to purchase dollar- denominated wheat. With the real currently trading at R$5.04/USD and domestic supplies expanding, mills are less willing to buy international wheat. With elevated global wheat prices and a devalued currency, selling for export has become an attractive revenue opportunity for Brazilian farmers and traders that partially offsets increased production costs. Exports will reach record levels for the second year in a row, forecast at 3.5 million tons for 2022/23. In 2021/22, constrained supplies from the Black Sea allowed Brazil to take advantage of strong demand in the Middle East, Southeast Asia, and North Africa. Exports to top destination Saudi Arabia, for example, were nearly five-fold higher than 2020/21. Source: International Grains Council 2 2.5 3 3.5 4 4.5 5 5.5 6 R$/USD Depreciation of the Brazilian Real 0 2 4 6 8 10 12 14 16 18 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Million Metric Tons Brazil Reaches Record Wheat Supplies in 2022/23 MY Imports Production Beginning Stocks Foreign Agricultural Service/USDA 5 November 2022 Global Market Analysis MARKET FEATURES Brazil Imports Decline as Production Expands Brazil wheat production is forecast at a record 9.4 million tons in 2 ample domestic supplies, imports are slashed to 5.9 million tons— While Brazil is a larg wheat producer, it still relies on imports to s especially in northern st tes where wheat is not grown. Its largest nearly 90-percent market share last year. Argentina’s wheat crop, dramatically in 2022/23 and exports are forecast to decline by ove The steep de impacted tra denominate trading at R$ expanding, international With elevate currency, sel attractive re farmers and production c for the seco tons for 202 from the Bla advantage of Southeast As destination S five-fold hig Source: International Grains Council 2 2.5 3 3.5 4 4.5 5 5.5 6 R$/USD Depreciation of the Brazilian Real 0 2 4 6 8 10 12 14 16 18 2014/15 2015/16 2016/17 2017/18 2018/19 201 Million Metric Tons Brazil Reaches Record Wheat Supplie MY Imports Production Beginni Foreign Agricultural Service/USDA 5 Global Market Analysis
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