Wheat buyers from a grain company in Brazil were in Kansas April 8-9, just as a temporary tariff change in Brazil signals an opportunity for U.S. wheat farmers to regain competiveness in South America's largest wheat importing market.
The Government of Brazil recently announced it would waive the 10% common external tariff for up to 1.0 million metric tons from April 1 through July 31, 2013. Brazil introduced the new duty free wheat quota due to a shortage of wheat from countries included in the Mercosur Agreement.
Brazil a big importer
Brazil is one of the top three wheat-importing countries in the world, but trades the commodity mostly with Mercosur members (Argentina, Paraguay and Uruguay) thanks to the free trade provisions in the agreement. Argentina has about 80% of the Brazilian market, according to USDA - but the Brazilian government has lifted the CET before when Mercosur member nations have a shortage of wheat. In 2008, Brazil imported about 907,000 metric tons from the U.S. when the CET was last waived. (In 2006-07, sales to Brazil from the U.S. only reached 25,000 metric tons.)
Knowing that Argentina would fail to produce enough to fill the country's needs, wheat end-users Edson Csipai, Rudolf Reiter and Valdemer Ferreira from Bunge Brazil visited several stops in Kansas during a tour intended to educate about the status of the Kansas wheat crop. U.S. Hard Red Winter wheat provides a good fit for the Brazilian end-use market.
The tour was sponsored by Bunge, a global grain company. Bunge's Brazil operations mill 1.4 million metric tons of wheat each year.
"The three participants wanted to see Kansas wheat," said Aaron Harries, director of marketing for Kansas Wheat in Manhattan. "They were really interested in the 2012 crop quality, but also the prospects for 2013."