Commodities Shuttle: Wheat slows down in the foreign market, but has a record price in the domestic market

While the price of wheat loses strength in the foreign market, it records record values ​​in the domestic market. On the Chicago Commodity Exchange, after being close to $11 a bushel for 15 days, the July contract is ending this month’s trading with values ​​closer to $9.

In the domestic market, the ton rose to record values, close to R$ 2,200, as monitored by Cepea (Center for Advanced Studies in Applied Economics).

The drop in the foreign market is due to an improvement in expectations about the US crop. There is also the possibility that Russian production will reach a record 89 million tonnes.

The rise in domestic prices is due to the value of the dollar, which makes imports more expensive, and the low domestic availability of the cereal, according to Cepea researchers.

Despite record domestic prices, imports are even more expensive, costing R$2,550 in Paraná and R$2,350 in Rio Grande do Sul, according to Cepea parity calculations.

One of the causes of this lower domestic supply is the record exports made by Brazil in the first months of this year.

From January to May, the country shipped 2.4 million tons of wheat abroad, a volume well above the 491,000 tons in the same period last year, according to data from Anec (National Association of Cereal Exporters).

Already imports retreated to 2.57 million tons in the period, 7% less than last year, according to Secex (Secretariat of Foreign Trade).

Traditional importer of the cereal, Brazil exported a record volume of wheat in the first months of this year due to the favorable prices of the product.

The good prices of the cereal attracted most of the producers. The planted area in 2022 is expected to rise to 2.89 million hectares, 5.4% more than in the previous crop, according to data from Conab (National Supply Company).

The area expansion takes place in Rio Grande do Sul, where the plantation will occupy 1.32 million hectares, 13% more than in 2021. As a result, the Rio Grande do Sul crop should reach 3.87 million tons.

The people of Paraná, despite the attractive prices of wheat this year, preferred the liquidity of corn. The area in the state fell by 3%, dropping to 1.18 million hectares.

But despite the drop in area in Paraná, the state’s production rises to 3.31 million tons, 3.3% above that of 2021, according to Conab’s calculations.

For the Deral (Department of Rural Economy), planting is nearing completion in the state, and 97% of the crops are in good condition.

In the external area, data from FAO point to a reduction in the world harvest from 2022/23 to 771 million tons. International stocks stand at 298 million tons, practically stable compared to 2021/22.

The internal rise in wheat prices reaches the pockets of consumers. French bread had an increase of 13.2% in São Paulo this year, accumulating 21.4% in the last 12 months.

Wheat flour rose 18% and 23% in the same periods, according to Fipe (Economic Research Institute Foundation).