WASHINGTON, D.C., U.S. — Brazil’s 2015-16 wheat production is estimated at 5.6 million tonnes, down from the previous year due to heavy rains in the south at the beginning of the season, the U.S. Department of Agriculture (USDA) Foreign Agricultural Service (FAS) reported on Jan. 26. The quality of the wheat harvest was negatively impacted by heavy rains in the southern region, which will require Brazil to import more high quality wheat this year.
Its 2015-16 wheat imports are forecast at 6.5 million tonnes, up 17% from the previous year due to lower quality domestic wheat and the need to blend the domestic with higher quality imported wheat to meet baking specifications. Argentina has returned to the market as the largest supply of wheat to Brazil, following two years where they were unable to ship large quantities.
It’s expected that Argentine imports will continue, especially now that the new government there has eliminated export restrictions on wheat. However, U.S. wheat may still be a viable option for some Brazilian millers, depending on the quality of the Argentine wheat. U.S. imports are typically strongest in July and August. Despite signing an agreement with Russia to import more Russian wheat, none has been exported to Brazil in 2015, the report said.
Brazil’s 2015-16 wheat exports are forecast at 1.5 million tonnes, a slight decrease from the previous year. In December 2015, Brazil exported 337,000 tonnes, mainly to Vietnam, Thailand, and the Philippines. Exports tend to peak between December and April.
Brazil’s wheat consumption for 2015-16 is forecast down at 10.4 million tonnes, a 1% decrease from the previous year. Prices of pastas and crackers are forecast to increase 6% in 2016 due to the strong dollar and inflation, which could further reduce consumption. There have been media reports that two of the largest millers in Brazil, Bunge and M. Dias Branco, colluded to control the price of wheat flour in the domestic markets in the North and Northeast regions of Brazil and are being investigated by the Administrative Council for Economic Defense (CADE).
Brazil’s corn production in 2014-15 is forecast at a record 85 million tonnes, due to excellent conditions for the second “safrinha” crop. The 2015-16 production is estimated at 81.5 million tonnes based on normal weather. A study released by the Mato Grosso Institute of Agricultural Economics (IMEA) projects that corn production in the state of Mato Grosso will double by 2025 to over 70 million tonnes. The study sites advances in technology and farm management, increases in area for the second “safrinha” crop, and improvements in infrastructure as the main drivers of the expansion.
Brazil’s corn trade for 2014-15 in exports are estimated at a record 32.5 million tonnes, based mainly on the strong dollar. The dollar appreciated over 30% in relation to the Brazilian Real (BRL) in 2015, making exports very lucrative for producers despite low global prices. The strong dollar will continue to incentivize exports into January and February.
In 2015-16 corn exports are estimated at 26.5 million tonnes, an 18% decrease from the previous year’s record, based on a smaller forecast. Due to the economic situation in Brazil and the need for state governments to increase revenue, several corn producing states are considering leveeing an export tax on corn and soybeans.
Brazil’s corn consumption in 2014-15 is forecast at 57 million tonnes with continued, but slowed, growth expected into 2015-16 at 58 million tonnes. Because of the weakening Brazilian currency, producers are choosing to sell their grain for export, as opposed to domestic consumption. According to the Brazilian feed industry, the price of corn for domestic use is increasing due to low stocks and is putting pressure on the pork and poultry sectors. If the Brazilian currency continues to weaken into 2015-16, the expansion of the pork and poultry sector may begin to slow, slowing the pace of domestic corn consumption.
Brazil’s rice production in 2014-15 milled production is forecast at 8.4 million tonnes a slight decrease from the previous estimate due to heavy rains and flooding in the largest rice producing state of Rio Grande do Sul. Initial reports forecasts losses of up to 15% of the crop in the state, but favorable weather following the floods helped to reduce the anticipated losses to an estimated 4%. Its 2015-16 milled production is forecast down to 8 million tonnes due to increased input costs, like irrigation and electricity, which have increased in 2015.
Brazil’s 2014-15 imports are estimated at 450,000 million tonnes in line with yearly trends. 2014-15 rice exports are estimated at 1 million tonnes, up 18% from the previous year on a strong dollar incentivizing exports.
Brazil’s rice consumption in 2014-15 is forecast at 8 million tonnes, up slightly from the previous year. Brazilians of all class traditionally consume rice daily, so the economic downturn will not likely cause a large increase in rice consumption, but it will reduce the amount of wheat-based products consumed.
