Brazil allows wheat imports from Russia

Brazil's government on Wednesday published a decree laying out procedures importers will have to follow to be able to buy and unload Russian wheat in Brazil, a step aimed at improving trade ties with Moscow. The decree, which takes effect immediately, outlines the type of documents importers will have to submit to be able to bring Russian wheat to be processed in Brazil.
Russian wheat imports had not been allowed previously. The Brazilian government's move should please Russian grain traders, who have been trying to find new export markets after bumper harvests. Brazil also expects it will help it lift a Russian ban on imports of certain Brazilian meats. "Bilateral trade must be a two-way street. If we want to sell more to Russia, we have to open our market to them," Deputy Agriculture Minister Eumar Novacki said in an interview. "If quality and price are there, why shouldn't we buy Russian wheat?"
The decision to allow Russian wheat comes at a moment when Brazil is increasing imports after a poor harvest. Brazil is expected to import around 7.2 million tonnes of wheat this year, the largest amount in a decade. Last year, the country had already bought more than 7 million tonnes, making it one of the world's largest buyers.
Brazil produced only around 4.3 million tonnes of wheat in 2017, versus 6.7 million tonnes in 2016. The country is currently consuming around 11.3 million tonnes per year. But it is unclear how attractive to Brazilian mills Russian wheat will be.
The mills buy most of the wheat they need from Argentina, which gets zero import tax as member of Mercosur customs union. Other wheat shipments come from the United States and Canada. Joyo Batista Cardoso, a Brazilian grains trader working in East Europe for ASA Trading, believes Russian wheat will be an option for northern states in Brazil, but hardly for southern mills who are likely to continue buying from Argentina.
"You can source Russian wheat with 11.5 or 12 percent protein at $190 or $191 per tonne FOB Black Sea. You will pay around $30 per tonne to take it to Brazil," he said. The decree restricts purchases of Russian wheat to mills located close to ports to keep the product from circulating too far because the government has yet to study the risk of plant diseases to local crops.
Many mills in Brazil are already located close to ports, due to the country's long history of imports.