The U.S. ag attache in Brazil says the U.S. is poised to maintain a portion of Brazil's wheat business in 2014, as U.S. imports have not slowed so far this year. The attache says Brazilian millers said they will continue to buy U.S. wheat since Argentina is a "problematic supplier" due to its current economic problems and government intervention in the wheat sector.
"In 2013, U.S. wheat was able to enter the Brazilian market en masse, taking advantage of market conditions," says the attache. "With Argentina out of market, and a temporary tariff reduction in place, U.S. wheat was able to effectively meet the needs of Brazilian millers. In 2013, Brazil became the second largest market for U.S. wheat, just 500,000 MTbehind China."
The attache pegs Brazil's 2013-14 wheat crop at 5.3 MMT, a 17% increase from the previous year based on anticipated high prices at planting. "However, those prices were not realized at harvest due to record global wheat pro duction. Brazil’s demand for wheat cannot be filled domestically because the domestic wheat must be blended with higher quality imported wheat in order to achieve desired baking qualities. When Brazilian millers use U.S. wheat, it’s blended at a ratio of 70% imported to 30% domestic, strongly supporting demand for U.S. wheat."
"It is speculated that Brazil may reduce the Common External Tarrif again in April to fill demand for wheat and keep prices stable during 2014, which is an election year," says the attache. "Increased demand and economic issues in the Argentine market, combined with U.S. wheat's reputation for quality and reliability create a favorable climate for U.S. wheat in 2014."
Link to full attache report.