Brazil will have no need to import US wheat next year because the crop in its main supplier, Argentina, will be big enough to meet the neighbouring country's projected demand of 7 million tonnes, the head of Argentina's Rosario grains exchange said. Rosario is Argentina's main export hub and traders there have been monitoring the health of the crop after storms in August and October flooded key parts of the country's wheat belt.
A bad crop could steer Brazil, Argentina's key market, towards buying US hard red winter wheat. Argentina shares a border with Brazil, which makes the two South American countries low-cost trade partners. Rosario grains exchange President Raul Meroi told Reuters that the protein content of this season's wheat "leaves much to be desired", but he added that early-season floods will not prompt a cut in the exchange's forecast of a 12 million tonne crop.
"The 12 million tonnes will be there," Meroi said in an interview at his Rosario office on Tuesday. The forecast is well up from the 9.2 million tonnes that the exchange says were harvested in 2013/14, about 2 million tonnes of which remain in reserve. Domestic wheat demand in Argentina is about 6.5 million tonnes, according to the government, which closely controls wheat exports as a way of ensuring ample local food supply.
So after the local market is supplied, Argentina should have 7.5 million tonnes of wheat to export, including last season's reserves. "These number allow us to think that Argentina will be able to meet most of Brazil's demand, which is expected to be about 7 million tonnes," Meroi said. With more than half the 2014/15 crop already harvested, the exchange forecasts an average nation-wide yield of 2.75 million tonnes per hectare. Stronger than usual storms in August and October hit the heart of Argentina's wheat belt in southern Buenos Aires province, which accounts for 35 percent of nation-wide output.
This caused initial concern that the exchange would have to lower its nation-wide growing area estimate of 4.4 million hectares. Recent satellite studies dispelled those fears, showing little permanent crop area damage although quality in terms of protein and weight per liter has suffered. Argentina's government and the US Department of Agriculture also expect the country to bring in 12 million tonnes of wheat this season. Thomson Reuters crop forecasting arm Lanworth sees an Argentine harvest of 11.6 million tonnes.