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Brazil looking northward for wheat

Brazilian flour mills may turn to the United States, Canada or even Russia to import wheat, industry sources said Jan. 26, after Argentina blocked exports to ensure domestic supplies following a poor harvest.

Brazil is the top buyer of wheat grown by its southern neighbour. But a source at Argentina’s government farm export office, ONCCA, told Reuters it was rejecting applications for wheat export permits.

The quantity of wheat Brazil may need to seek elsewhere will depend on how much, if any, Argentina will supply, having already approved 1.2 million tonnes in exports to various countries last month.

“In any case, they (the Argentinians) don’t have wheat to meet all of our needs,” said Luiz Martins, president of the Sao Paulo Wheat Industry Union (Sindustrigo).

Argentina’s wheat harvest ended in January and is expected to have produced around half last year’s 16 million tonnes due to a severe drought. That would make it the smallest crop in 20 years, according to the Buenos Aires Grains Exchange.

“We’re going to have to arrange other suppliers,” Martins said, noting that the Brazilian sector is lobbying the government for a 10 per cent cut in the tariff on wheat imports for stocks sourced outside the South American free trade bloc Mercosul.

Brazilian mills are likely to turn to the United States – the world’s top wheat producer and Brazil’s second-biggest wheat supplier after Argentina – as well as Canada to make up any shortfall. The United States supplied 906,000 tonnes of wheat to Brazil in 2008.

“If I can, it’s from there I will import,” said Martins.

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