Argentine Wheat Surplus Seen Replacing Brazil Imports From U.S

Argentina, Latin America’s largest wheat producer, is poised to supply neighboring Brazil’s imports in the coming harvest, eliminating the need for surging purchases from the U.S.

Argentina expects a 6-million-ton surplus out of a 12-million-ton 2013-2014 crop that growers will start harvesting next month, allowing it to ensure supplies to Brazil, Brazilian Agriculture Minister Antonio Andrade said, citing information from a meeting with Argentine authorities yesterday. Daniel Bestty, a spokesman for Argentine Agriculture Minister Norberto Yauhar, said he couldn’t immediately comment on the country’s outlook for the crop and exports.

“If they can get to that output we won’t need to import any more wheat from outside the Mercosur,” Andrade said today in an interview in Brasilia, referring to the trade bloc led by the two South American countries. “We will only seek wheat purchases from elsewhere in case they have any output losses.”

Brazil’s imports of U.S. wheat surged 46-fold this year through August to 1.46 million tons after domestic output declined and Argentina, traditionally the main supplier of the grain, restricted exports to ensure local supply. Purchases from Argentina slumped 30 percent to 2.5 million tons in the same span.

Frost this week harmed about 15 percent of Argentina’s planted wheat crops, said Juan Ignacio Dreiling and Aldana Ferradas, analysts from Buenos Aires and Bahia Blanca Grains Exchanges, respectively.

Wheat crops in the Bahia Blanca area, which produces 50 percent of Argentina’s wheat, weren’t affected by frost because they are in an early development stage, Ferradas said. The grain is growing healthy, received good rainfall, and yields should rise if rain continues without frost, he said.

Halted Exports

Argentina halted wheat exports in December to meet domestic demand estimated at about 6 million tons after the 2012-2013 crop amounted to 8.2 million tons, the lowest in more than three decades.

Brazil scrapped an import tax on wheat from outside the Mercosur trade bloc to meet internal demand for a maximum of 2.7 million tons to be imported until November. The U.S. became the biggest wheat exporter to Brazil in July and August, according to data from the country’s Trade Ministry.

Frost in July cut wheat output by 26 percent in the southern Brazilian state of Parana, the biggest growing area for the grain in the country, according to government data.

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