Brazil’s record wheat exports bring funds to boost domestic production, reduce imports

Brazil, one of the world’s biggest wheat importers, could sharply reduce its dependence on foreign crops as record export demand provides farmers with the funds to expand their planting areas.

The country exported around 2.5 million tonnes of wheat from December to March, an unprecedented volume driven by a historically good harvest in 2021, while demand has been further boosted by the war between major suppliers Russia and Ukraine.

That is likely to encourage more planting in Brazil, with analysts saying there is room to double the current 2.74 million hectare sown area in coming years and eventually meet domestic consumption needs of some 12.7 million tonnes a year.

Brazil currently imports more than 50% of its domestic wheat consumption, mostly from Argentine.

“The growth of any commodity takes place via the expansion of exports, not of domestic consumption,” said Luiz Pacheco, from T&F consultancy. “It was like that with soybeans, corn, coffee and sugarcane in Brazil. And it will be like that with wheat.”

In the decade to 2020, annual corn exports from Brazil increased more than threefold to around 35 million tonnes, while production nearly doubled, to more than 100 million tonnes.

“Farmers want to plant wheat,” said Oswaldo Vieira, an analyst with Embrapa Trigo. “One of the factors is having liquidity…and exports are a very important path for this.”

Vieira cited Brazil’s southernmost state of Rio Grande do Sul as an example. More than 6 million hectares are planted with soybeans in the summer, but just 1.16 million hectares of that area is sown with wheat in the winter.

The state’s planted area could expand by around 30% this year he said, considering that nearly 600,000 tonnes have already been sold in advance.

Wheat from Rio Grande do Sul could also enter export markets before Argentine crops given idle capacity at the Rio Grande port.
Source: Reuters (Reporting by Roberto Samora Writing by Ana Mano; Editing by Kirsten Donovan)