Foz do Iguaçu, October 28, 2024 – U.S. wheat exports to Brazil are expected to range between 340,000 and 360,000 tons in 2024, according to Osvaldo Seco, deputy regional director of U.S. Wheat Associates in South America.
From January to September, Brazil imported 272,000 tons, based on data from the Brazilian Wheat Industry Association (Abitrigo). By the end of last year, only 107,300 tons were traded, “primarily due to the high price of hard red winter wheat.”
Safras News spoke with leaders from the U.S. cereal promotion association during coverage of the 31st International Wheat Industry Congress in Foz do Iguaçu (PR).
Seco recalled that the U.S. once exported 4 million tons in a single year to Brazil in 2013, when Argentina’s wheat crop experienced a significant loss. According to U.S. Wheat’s CEO, Vince Peterson, it’s not advisable to estimate a fixed percentage of Brazilian imports for which the U.S. should be responsible. “Argentina has preferential access, and we always take the remaining market share when they can’t meet supply,” he said.
The representatives had hoped to capture almost all of the 750,000 tons exempt from the Common External Tariff (TEC), “but in reality, mills are utilizing much of it for Russian wheat,” Seco noted. “For us, it would be ideal if there were no TEC-free quota, with the market fully open,” Peterson added.
They see “very tough” competition from Russia, noting that while U.S. wheat competes on quality, Russian wheat’s appeal lies in its low price. “The market is distorted, with Russian wheat being sold here in Brazil, from the other side of the world; and Brazilian wheat being sold in Vietnam, on the opposite side of the world”, Seco commented. Although freight costs are higher for Black Sea-origin wheat, low prices offset them.
Loyal Customers
Although U.S. wheat supply to Brazil is “erratic”, fluctuating each year, they remain optimistic about a rebound and consistency. Meanwhile, they celebrate increased sales to loyal markets in Latin America and Asia, particularly in Peru, Chile, Ecuador, Japan, and Singapore. The U.S. has direct trade agreements with many of these countries. In Asia, unlike South America, customers are less price-sensitive and more quality-sensitive.
Quality
U.S. Wheat representatives are emphatic in defending their product, arguing that the country doesn’t produce for lower-quality markets, with “no low-quality varieties.” They admit, however, that in years of crop losses, harvests may not meet typical standards. Mike Spier, vice president of overseas operations, observed that the past two harvests were subpar and shouldn’t set the benchmark for U.S. production quality and quantity.
Despite indicators of adverse weather on U.S. wheat fields, they consider it too early to project next year’s crop quality. The current available crop, which is currently being marketed, is in good condition.
According to Clark Hamilton, chairman of the association’s board, the U.S. has experienced three consecutive crop failures, with successive droughts driving prices up sharply. “But if we look before this period, we’ll see that we’ve always been a player in the Brazilian market,” he said.
Spier noted a growing global demand for higher-quality product varieties. He said the U.S. advantage lies not only in quality production but in the availability of diverse wheat types with various characteristics. “We may not always be the cheapest supplier, but it’s not just about price. Markets want different types of raw materials for different types of products,” he evaluated.
U.S. Wheat Associates argue that it’s more advantageous and convenient to have specific wheat types tailored for each production type, as this reduces the need for additives. “Newer generations care about this,” Peterson said. Hamilton noted that the soft white variety is the most consistent for various uses.
The CEO explained that quality isn’t just about flavor or product texture; it also involves milling issues. Mill efficiency improves when better wheat is used, which is evident in consumption and industry yields. “One example is the moisture content of the grain reaching the mill: the lower it is, the greater the savings,” he noted.
Gabriel Nascimento (gabriel.antunes@safras.com.br) / Safras News
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