Cotrisa Monitors Chilean Wheat Import Cost
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For MY2022/23, due to high Wheat prices, Wheat area harvested will total 240,000 hectares, which represents a 5.3 percent increase over MY2021/22, according to the USDA. Wheat yields depend on the region harvested. Wheat yields in the Metropolitana region in the central part of the country are around 5.0 MT per hectare. In Los Lagos region, in the southern part of the country, yields can reach 8.0 MT per hectare. A significant difference between these regions is that in Los Lagos, there is a higher abundance of water due to higher precipitation during the winter.
In contrast, the Metropolitana region relies heavily on irrigation for agricultural production. Average yields are estimated to remain flat at 6.0 MT per hectare, similar to MY2021/22 levels. As a result of the increase in output and steady yield, for MY2022/23, the USDA estimates production at 1,440 MMT, representing a 5.3 percent increase over MY2021/22.
For MY2022/23, consumption is projected to reach 2.920 MMT an average of one percent annual growth, following the population growth rate in Chile. Mills process Wheat to produce bread, cookies, and pasta. Mills mix different types of Wheat from various sources (domestic and imported) to produce multiple products. Mills are constantly testing for different types of Wheat and improving the mix to optimize their business process and the quality of their products.
Feed consumption is forecast at 280,000 MT For MY2022/23, due to higher Wheat prices. Feed use of Wheat is destined for the salmon farming industry and represents the remaining 10.6 percent of Chilean Wheat consumption. The USDA forecasts stocks to decrease to 230,000 MT, assuming tight international markets, high prices, and no major changes in domestic storage capacity.
The average Wheat price in Chile increased from $256 per metric ton in January 2021 to $387 per ton in May 2021. Throughout MY2021/22, the cost of importing Wheat from Argentina remained competitive against the cost of importing U.S. Wheat and the price of domestic Wheat. More recently, international price increased due to the forecast of lower supplies from Ukraine.
An increase in the price of bread is the immediate response to high Wheat prices. However, because bread is considered a staple of first necessity, the demand for bread does not decrease directly with higher bread prices. Increased purchasing power will allow many Chilean consumers to absorb higher prices without changing consumption patterns.
The private company Cotrisa (Comercializadora de Trigo S.A.) monitors prices and imports costs of Wheat. Cotrisa has a purchasing program for small Wheat producers. Moreover, Cotrisa seeks to support small producers by increasing transparency in price information and by certifying the quality of their products.
Chilean Wheat Trade
For MY2022/23, the USDA estimates Wheat imports to decrease to 1.45 MMT as a response to the higher domestic production, higher international price, and a strong U.S. dollar. Chile is a net Wheat importer since domestic production does not cover consumption needs. The bulk of Chilean Wheat imports happens between May and August when domestic supply is low. The primary source for Chilean Wheat imports in MY2020/21 was Argentina, followed by Canada and the United States. In MY2020/21, Argentina positioned itself as the leading supplier of Wheat to Chile due to its competitive price and proximity.
According to the AgFlow data, Argentina led their import market with 1.2 MMT in 2021-2022, followed by Canada (0.1 MMT) and the US (0.08 MMT). Wheat from the United States competes with Canadian Wheat due to its quality and types, which offers the possibility to produce different kinds of bread and other products such as pasta and cookies.
Other sources: https://www.usda.gov
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