Brazil Wheat Market – MY 2022/2023 Overview
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Brazil’s Wheat Production to Exceed Initial USDA Forecasts for the MY 2022/2023
Brazil’s Wheat production reached 7.7 Mmt in the MY 2021/2022, which is 1.45 Mmt higher YoY, due partly to a 0.4 Mha increase in harvested Area. The USDA had initially estimated Brazil’s Wheat production to reach 8.5 Mmt for the MY 2022/2023. However, in the update released on February 8th, the USDA revised its estimate to 9.9 Mmt, which is 1.4 Mmt higher than the previous estimate and 0.39 Mmt higher YoY. This increase is partially due to a 0.30 mt/ha increase in Harvested area YoY. Additionally, Brazil approved the planting of genetically modified Wheat on March 3, 2023. How will this new regulation influence the USDA’s upcoming estimates of Brazil’s Wheat production?
Figure 1: Brazil’s Wheat Production and Area Harvested (MY 2019/2020 – 2022/2023)
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Brazil’s Wheat Imports Increase YoY in Early MY 2022/2023
In the MY 2021/2022, Brazil’s domestic Wheat consumption exceeded local production, reaching 11.75 Mmt, 3.8 Mmt higher than production. As a result, Brazil’s Wheat imports reached 5.5 Mmt in the MY 2021/2022, which is 1 Mmt higher YoY, despite production increasing by 1.45 Mmt YoY in the same the MY. Consequently, Brazil ranked as the 7th largest Wheat importer worldwide. At the beginning of the MY 2022/2023, Brazil’s Wheat imports reached 2.3 Mmt between Oct 2022 and Feb 2023, 48 kmt higher YoY. The switch to genetically modified Wheat, will improve production, lead to more self-sufficiency and reduce imports in the coming years.
Figure 2: Brazil’s Wheat Imports (MY 2020/2021 – 2022/2023)
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Brazil’s Wheat Exports Decrease YoY in Early MY 2022/2023
Despite being a significant Wheat importer, Brazil also exports Wheat. In the MY 2021/2022, Brazil exported 2 Mmt of Wheat. The main destinations were Indonesia with 0.71 Mmt, Vietnam with 0.2 Mmt and Germany with 0.17 Mmt. At the beginning of the MY 2022/2023, Brazil’s Wheat exports were 0.1 Mmt lower YoY between Oct 2022 and Feb 2023. Indonesia was the leading destination with 0.55 Mmt, followed by Saudi Arabia with 0.3 Mmt and Mauritania with 0.1 Mmt. With Brazil adopting genetically modified Wheat since March 3, 2023, the country’s competitiveness in the Wheat market is expected to improve. How competitive were Brazil’s Wheat prices before March 2023?
Figure 3: Brazil’s Wheat Exports (MY 2020/2021 – 2022/2023)
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Will Brazil Become the Most Competitive Origin for Wheat in LatAm?
During the better part of the MY 2021/2022, Brazil’s Wheat FOB prices remained consistently lower than Argentina’s, with only a brief exception in Jan and Feb 2022, during which Brazil’s Wheat prices averaged at USD 14.8/mt and USD 17.5/mt higher than Argentina’s, respectively. The highest Brazil Wheat FOB price during the MY 2021/2022 was USD 411.8/mt, reached in July 2022, but this was still USD 67.4/mt lower than Argentina’s. At the beginning of the MY 2022/2023, Brazil Wheat FOB prices remained lower than Argentina’s, with a difference of USD 60.2/mt in October 2022. Yet, they were USD 46.6/mt higher YoY. In February 2023, Brazil Wheat FOB prices were USD 24.1/mt higher YoY, but only USD 6/mt higher than Argentina’s average price. While Argentina has allowed genetically modified Wheat production since 2020, Brazil’s Wheat prices remained more competitive in 2022. With the introduction of GM Wheat, Brazil’s Wheat price competitiveness will improve more in the coming years.
Figure 4: Brazil and Argentina Wheat FOB Prices (Oct 2021 – Feb 2023)
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In a Nutshell
In October 2020, Argentina was the first country to allow the introduction of genetically modified Wheat (HB4) for cultivation, food and feed consumption. On March 3 2023, Brazil became the second country globally to approve GM Wheat. The HB4 Wheat developed by Biocers S.A is approved for food consumption in several countries, including Australia, Colombia, New Zealand, Nigeria, Canada, and the U.S.
While Brazil is one of the significant Wheat importers worldwide, it also exports Wheat and recorded 4.4 Mmt of exports in the MY 2021/2022. In addition, despite Argentina being a leading Wheat exporter, Brazil’s prices were more competitive in 2022 and remain so in early 2023. With the approval of GM Wheat production in early 2023, Brazil may emerge as the most competitive Wheat exporter in Latin America. However, since the consumption approval doesn’t cover all the existing destinations, such as Indonesia and Vietnam. Brazil’s destination will shift to destinations which have already approved HB24, such as Australia, NZ and Nigeria.
