Venezuelan Wheat Milling Industry – At 24% Capacity
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Venezuela is entirely dependent on imported Wheat for domestic consumption. Wheat consumption estimates for marketing year (MY) 2022/23 will increase by 5 percent from the previous marketing year to 1.2 million tons, based on rising Wheat imports due to an expected recovery of the Venezuelan economy.
The national milling industry is expected to rebound in the production of pasta and Wheat flour due to the regime’s priority of increasing local processing capacity. The Venezuelan milling industry will likely translate rising prices of Wheat into higher consumer prices if commodities become less available in the market due to current global uncertainty and supply disruptions.
In MY 2021/22, the Wheat consumption estimate was 1.15 million tons. Driven by a regime policy, the domestic industry tried to increase production, but local pasta was not satisfactorily sold in the market, given the competitive prices of pasta from Turkey. In calendar year (CY) 2021, the domestic Wheat industry and the regime agreed to progressively increase demand for domestically produced pasta. The objective was to achieve a supply balance of 50 percent domestic pasta and 50 percent imported pasta through price reductions and product availability.
The annual per capita consumption of Wheat, based on a population of 28 million, remains at approximately 37 kg (82 pounds). The purchasing power of Venezuelan consumers is slowly strengthening, supported by the augmented salaries paid by the private sector and a rebound in the reception of remittances in MY 2021/22.
The milling industry is currently working at an average capacity of 24 percent. The nominal installed milling capacity is 2.54 million tons per year. Now, the milling industry produces 65 percent of total consumption. The monthly needs of the Venezuelan Wheat milling industry to supply the current domestic market and maintain reasonable inventory levels are 115,000 tons per month (50,000 tons of Hard Red Winter (HRW) Wheat, 40,000 tons of durum Wheat, 20,000 tons of Wheat blend, and 5,000 tons of soft Wheat for cookies and crackers).
Venezuelan Wheat Trade
The USDA forecasts Venezuelan Wheat imports to be 1.2 million tons in MY 2022/23, a 10 percent increase from MY 2021/22. Imports are expected to increase due to an expected economic recovery and the improvement of the purchasing power of the industry through the strengthened opportunity to access financing credit. In MY 2021/22, imports were estimated at 1.1 million tons.
Venezuela continues importing Mexican durum, although it is not preferred due to the quality and milling yield issues. Venezuela will have limited capabilities to import Wheat from the United States, which is favored by the industry due to higher quality and better milling yields, due to high prices, and will shift over to other suppliers. As a new development, Venezuela imports increasing quantities of Wheat from Brazil. Brazil’s Wheat production increased in MY 2021/22. The Wheat exports from Brazil could start to compete with the U.S. Hard Red Winter in MY 2021/22 and MY 2022/23 if Brazil can compete on price. However, Venezuela is accustomed to US Wheat’s high quality and milling yields.
Venezuelan Wheat imports from Russia and Ukraine have been declining since CY 2019. In MY 2020/21 and MY 2021/22, there were no Wheat imports from Russia, and only small quantities of flour were imported from Ukraine. In MY 2020/21, Turkey led the country’s Wheat import, followed by the United States, Canada, Mexico, and Brazil. According to AgFlow data, the United States led the Venezuelan Wheat import market with 0.2 million tons in Jan-Oct 2022, followed by Canada (0.18 million tons), Russia (0.08 million tons), and Brazil (0.01 million tons).
Other sources: https://www.usda.gov
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