Players focus on possible increase in the domestic supply

Cepea, April 16, 2021 – Brazilian wheat mills say they had inventories in early April; therefore, they did not need to close deals in the short-term. Moreover, trades involving byproducts were moving at a slow pace in the first fortnight of the month. Sellers, in turn, were firm regarding values of new batches. In this scenario, trades were slow, and players were focused on projections of an increase in the Brazilian wheat supply this year.

 

According to data from Conab, the area is likely to increase 1.6% in the 2021/22 crop compared to the previous, and the productivity, 0.6%, resulting in production of 6.37 million tons, 2.2% up in relation to the season before.

 

Conab also says that imports may drop 3%, at 6.4 million tons from August/21 to July/22. Considering initial stocks (in August/21), production in 2021 and imports, the domestic availability is forecast at 13.33 million tons, 2.1% more than what was projected for the period between August/20 to July/21. This volume may meet the domestic demand of 11.8 million tons, 1.8% above that in the period before. Exports are forecast by Conab at 600 thousand tons, downing 33% in relation to shipments estimated from August/20 to July/21. As a result, ending stocks may total 930.2 thousand tons by July/22, 65.2% higher than that projected for July/21.

 

GLOBAL SUPPLY AND DEMAND – Data released in early April by the USDA indicate that the 2020/21 world production may shrink 1.6% in relation to the 2019/20 crop, totaling 776.492 million tons.

 

The consumption is expected to increase 4.6% from 2019/20 to 2020/21, hitting 781.013 million tons. Global inventories may decrease 1.6% compared to the last season, at 295.523 million tons. Therefore, the stock/consumption relation remains moving down, changing from 38.8% to 37.8%.

 

As for 2020/21 exports, the USDA estimates a significant decrease of 22.8% for Argentinean sales in relation to the season before, amounting 10.5 million tons. In the European Union, the decrease is also sharp, changing from 38.42 million to 27.5 million tons comparing 2019/20 and 2020/21 crops.

 

IMPORTS – Secex indicates that, in March/21, wheat flour imports totaled 21.25 thousand tons, 17.1% up compared to the month before. Exports, in turn, amounted 3.5 thousand tons last month, downing 25.3% in relation to February/21. As for the wheat grain, Brazil purchased 611.05 thousand tons in March, increasing by 35.9% compared to the month before.

 

(Cepea-Brazil)

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