Boost in US HRW Production Offers Safety Net for Brazil

As corn prices hit 10-year highs in Brazil, meatpackers have started using wheat as a feed grain in an effort to lower costs. But if the dry conditions that have wreaked havoc on the country’s corn crop impact domestic wheat production, this rise in demand means Brazil will find itself with a serious wheat shortfall.

Gro’s Hard Red Winter Wheat Yield Forecast Model points to an ample US harvest, which was confirmed by last week’s Wheat Quality Council Tour. US producers will therefore be trying to find markets for their bumper crop. Brazil, which relies heavily on imported US hard red winter wheat in short crop years, would provide a welcome market. 

Brazil is one of the largest importers of wheat. Argentina is the main source, because of a long-standing import duty of 10% on wheat from outside the Mercosur trade bloc. However, Brazil implemented an annual duty-free tariff rate quota (TRQ) of 750,000 tonnes of wheat imports in 2019.

Most wheat enters Brazil through its Northeastern ports, and Argentina wheat prices into those ports are still more competitive than US wheat even when it comes in duty-free. But high production in the US is likely to drive down prices, and the last time Brazil saw a poor wheat harvest, it turned to the US to make up the shortfall. In 2013, when domestic wheat production declined 25%, Brazil imported a record 3.5 million tonnes of US wheat, versus the typical volumes of 100,000 tonnes or less. 

Gro’s Explorer app is a simple, comprehensive way to evaluate growing conditions in Brazil. The tool allows Gro users to easily monitor soil moisture, precipitation, temperature, vegetative health, and other weather and climate indicators. 

Join Gro on June 17 or 22 for a webinar to learn how you can use the Growing Conditions app. The Growing Conditions app gives a quick, geospatially precise, and crop-weighted overview of growing conditions. The app helps users forecast the impact of weather for the regions and assets they care about.

This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.