Brazil's Foreign Trade Council last week made the decision to allow wheat to be imported from countries outside South America without the usual 10% tariff. The temporary exemption is to expire in July and has set a quota of 1 million metric tons. However; according to local reports Monday, the duty-free access may be extended past July.
Argentina is usually the main supplier of wheat to Brazil, but they closed exports in the middle of 2007 and have only recently reopened for the exportation of 2 million metric tons. According to Luiz Martins, president of the San Paulo Wheat Industry Union, all that wheat will not be coming to Brazil and he doubts that Argentina actually has that much wheat to export.
Brazil's preference is to buy wheat from Argentina, but the instability of that supply is what caused the tax exemption. According to trade officials if there is a problem with the wheat supply, the Foreign Trade Council could move the end date or extend the quota altogether.