Cepea, March 18, 2020 – In a scenario of low supply in Brazil and strong US dollar, domestic wheat prices remained firm in the first half of March. The sharp dollar appreciation lowered wheat imports even more – on March 13, the American currency closed at 4.852 BRL, a staggering 8% up compared to that on February 28.
As sellers have been away from the market – and unwilling to lower asking prices –, liquidity was low in Brazil in the first fortnight of March. As regards demand, the purchasers that need to replenish inventories were not finding batches to buy.
WORLD SUPPLY AND DEMAND – In a report released on March 10, Conab (Brazil’s National Company for Food Supply) kept imports estimates at seven million tons, and exports, at 300 thousand tons. Thus, wheat supply in the Brazilian market was kept at 12.9 million tons, and ending stocks, at 850.6 thousand tons.
The USDA also released a report on March 10 revising up world production estimates to 764.5 million tons in the 2019/20 crop, 0.1% more than that reported in February, but 4.5% less than that in the 2018/19 season. Higher production in Argentina and in India more than offset the reductions in Australia and in Turkey.
World trades were revised up slightly, with higher imports from Turkey. As regards wheat exports, higher shipments from Argentina and Russia more than offset the reductions forecast to Canada and Australia. Thus, world trades were revised up to 184.1 million tons, 0.4% up compared to that estimated last month and 5% higher than that in the previous season.
Russia continues as the major wheat-exporting country in the world (for the third consecutive year). Favorable weather, added to higher production technology, favored yield and quality. With higher supply, the country has become more and more competitive.
IMPORTS IN FEBRUARY – Despite the low wheat supply in Brazil, wheat imports decreased in February, due to both the sharp US dollar appreciation against Real and firmer prices in Argentina – which, it is worth to mention, is Brazil’s top wheat supplier.
According to data from Secex, in February, Brazil imported 526.1 thousand tons of wheat, 18.8% less than in January/20 and 13.2% less than in February/19.
Of the total volume imported, 87.6% came from Argentina, 6.9%, from the United States, and 4.7%, from Paraguay.
As regards wheat flour, imports in February were 11.5% lower than in January, but 11.6% higher than in Feb/19, totaling 28.2 thousand tons last month.
EXPORTS – Brazilian wheat exports, in turn, totaled 106.7 thousand tons in February, 11.3% less than in January/20, but 23.4% more than in Feb/19. The major destinations for the Brazilian wheat were Saudi Arabia and Vietnam, which received 58.5% and 41.5%, respectively, of all the volumes Brazil exported in the period. Between August/19 and February/20, shipments totaled 279.5 thousand tons, against 461.7 thousand tons between August/18 and February/19. As regards wheat flour, exports were 4.1% higher than in January, but 6.9% lower than in Feb/19.