2015-16 wheat imports are forecast at 5.7 million tonnes, up 6% from the previous year based on the pace of imports. Wheat exports in 2015-16 are estimated at 1.1 million tonnes, a slight decrease from the previous year when much of the lower quality wheat was exported. Brazil has already exported most of its wheat for the marketing year and it’s expected that only a few shipments will go out between June and October.
The wheat consumption for 2015-16 is forecast down at 9.7 million tonnes, a 7% decrease from the previous year. The current economic situation, with inflation over 10%, is increasing prices which, in turn, are making some consumers reduce their consumption of crackers and pastas. Compounding the problem, high domestic corn prices are making pork and poultry producers have difficulty sourcing feed and there have been reports of producers using bread quality wheat to feed their animals.
Three producers from the southern Brazil have reportedly resorted to feeding chickens and pigs higher-quality grains normally used for human consumption in breads or cookies. Sources estimate that the meat industry has purchased 220,000 tonnes of bread-quality wheat since May for feed. If this pattern of human grade wheat consumption for animal use expands, flour prices will also rise. Wheat stocks, like corn, are also very low at an estimated 870,000 tonnes with only 15,000 tonnes held in public stocks.
Brazil’s 2015-16 corn production is estimated at 75 million tonnes, due to an early start to the dry season having an adverse effect on the second “safrinha” crop. This is down 12% from the previous year’s record crop. Domestic corn prices have risen dramatically since March, putting pressure on pork and poultry producers.
A significantly lower than anticipated supply of corn continues to drive an increase in domestic corn prices in 2016. A devalued currency that incentivized producers to export remaining stocks of corn, coupled with an early start to the dry season, is severely limiting available domestic supplies. Brazilian corn exports are up 138% from 2015. As a result, domestic prices increased up to 53.38 Real ($15.38) per 60-kg bags, suggesting a port price of an estimated $250 per tonne. Stocks are estimated at a low 5.9 million tonnes, prompting buyers to seek foreign imports.
Corn exports for 2015-16 are estimated at 23 million tonnes, down 33% from last year’s record exports. Tight supplies, combined with high domestic demand and a reduced second “safrinha” crop are all factors in the expected decrease in exports.
To relieve pressure on poultry and pork producers, the Brazilian government released nearly one million tonnes of public stocks in May, but this did not provide substantial relief.
