Brazilian wheat production reduction government may abolish wheat import tariffs

(agricultural Wealth Network) according to market analysts speculated that the Brazilian government may lift tariffs on wheat imports outside the Southern Community. Wheat crops have been severely affected by torrential rains in the main wheat-producing areas of Brazil.

The poor harvest of wheat in the main wheat-producing region of Parana, Brazil, yielded only 2.8 million tons, 20% lower than previously expected, prompting agricultural groups to lobby Brazil's Ministry of Agriculture to abolish wheat import tariffs.

At present, Brazil levies a tariff of 10% on wheat imports from countries outside the Southern Community.

Although Brazil usually imports wheat from Argentina to meet domestic demand, the continued drought in Argentine wheat producing areas and farmers replanting more efficient soyabean crops have led to a sharp decline in Argentine wheat supply.

According to the Buenos Aires Grain Exchange of Argentina, Argentina's wheat production this year is estimated to be 7.75 million tons. This is far below the five-year average of 14.8 million tons. The domestic demand for wheat is about 6.5 million tons, which means that the export supply of wheat is only 1.25 million tons.

Analysts point out that Brazilian wheat imports from countries outside the Southern Community are likely to soar to 20 to 3 million tons, which will provide a good opportunity for North American producers. Given the sharp decline in Argentine wheat production and Paraguay suffering from bad weather like Brazil, Brazilian traders are likely to import wheat from the United States and Canada, analysts said.

According to the USDA, the gap between supply and demand of Brazilian wheat in 2009 / 10 is estimated to be around 7 million tons, compared with 4.7 million tons in the previous year.