Demand decreases, but low supply underpins prices in Brazil in the first half of February

Cepea, February 19, 2021 – Wheat prices continued firm in the Brazilian market in the first half of February, underpinned by the low domestic supply. Not even the decrease in the demand in the second week of the month was able to press down quotes in the regions surveyed by Cepea. Agents from mills reported an increase in the wheat inventories as well as difficulties to pass on to by-products the higher prices of the raw material. Thus, Cepea collaborators claim that sales from food processors and retailers were slow in the first fortnight of February.

 

As regards the coming crop, although it is still early to assess production, Cepea collaborators expect the area allocated to wheat to increase, largely on the farms where sowing of the second crop corn was not in the ideal period.

 

Data released by Conab (Brazil’s National Company for Food Supply) in the second week of February indicate that the national area allocated to wheat crops should increase by 2.1% this year. The productivity of Brazilian wheat crops is forecast to increase by 1.1% compared to that in the previous season, resulting in an output 3.3% larger.

 

IMPORTS – With low wheat supply and slow trading pace in the Brazilian market, national wheat processors increased imports in January, despite the high price levels in the international market.

 

According to Secex, in January, Brazil imported 643.9 thousand tons of wheat, 127.1% more than the volume imported in December 2020, but 0.6% below that from January/2020. Of the total amount imported last month, 90.3% came from Argentina; 5.1%, from Uruguay; and 4.6%, from Paraguay.

 

The average import value in January was 240.58 USD per ton, 2% up from that in December/20 and 23.7% above that in January/2020. Considering the average dollar in January/2021, at 5.36 BRL, the average import value was 1,289.03 BRL/ton FOB (Free on Board, origin), 59.7% up from that in January/2020.

 

(Cepea-Brazil)

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