Brazil spoiled an improved world wheat demand picture by
revealing that its own imports will fall to the lowest since the 1990s, undermined
by a harvest upgraded to an even higher record top.
Conab, the official Brazilian crop bureau, cut by 200,000
tonnes to 5.10m tonnes its estimate for Brazil's wheat imports in 2016-17 – the
lowest figure on data going back to the late 1990s.
The downgrade followed a series of upbeat headlines for
wheat import demand, with Saudi Arabia, one of the world's top buyers,
revealing a tender for 715,000 tonnes of the grain, while Ethiopia tendered for
Separately, India, where wheat prices hit a record high last
month, cut its 10% import tax, fuelling ideas that the country's harvest this year
was well below the official estimate.
Indeed, some observers believe that India's purchases will
hit 5m tonnes this season - a figure now in line with that of Brazil, which is
a structural importer of the grain, contrasting with its huge exports of the
likes of corn, soybeans and sugar.
Conab said that its cut to the export forecast reflected a harvest
which now looked like reaching a record 6.70m tonnes - 400,000 tonnes more than
expected last month, and a 21% jump year on year.
Conab estimates for Brazilian wheat production and (imports)
2016-17: 6.697m tonnes, (5.100m tonnes)
2015-16: 5.535m tonnes, (5.518m tonnes)
2014-15: 5.971m tonnes, (5.329m tonnes)
2013-14: 5.528m tonnes, (6.642m tonnes)
2012-13: 4.380m tonnes, (7.010m tonnes)
The upgrade reflected in particular better hopes for crops
in the top two producing state of Parana, where this year's harvest was now
seen beating last season's, and Rio Grande do Sul.
The Rio Grande do Sul harvest was heading towards its final
chapter "with surprising results", in terms of both quality and yield, "despite
climatic adversities during the growing season".
Parana, where the harvest is nearly over, "crop obtained an
excellent yield" which, at 3.14 tonnes per hectare, was 25% higher year on
"The quality of the grain is also worth mentioning in this
harvest, since most of the harvest has… excellent results in the analyses of
falling number and gluten strength".
Indeed, Conab highlighted the extent of Brazilian "production
of good quality wheat" this year as an extra depressant to import prospects,
with the country typically buying in particular milling grain for food needs.
And what Brazil does need will be sourced largely from default
supplier Argentina, which is also enjoying a decent harvest.
"The supply of wheat in Mercosur will be wide, with
production in Argentina expected to increase from 11.3m tonnes to 14.4 million tonnes,
supplying the market with good quality wheat," Conab said.
"With this, this country [Argentina] will have a surplus of
8m tonnes, requiring the continuation of its good export performance, as has already
been observed recently," to avoid a rise in stocks.
Argentina is expected to export about half of that surplus
to its neighbour, equivalent to a 78% share of Brazil's imports in 2016-17, up
from 65% last season.
Indeed, the data imply just 1.1m tonnes being left for other
origins, which typically include Paraguay, Uruguay and the US.