After soybeans and corn, Brazil will become a major international player in the wheat sector. Covid and the war between Russia and Ukraine brought new challenges to the international commodity market.
One of the main challenges occurs in the wheat chain, a product that is among the most affected by the war, due to the important participation of the two countries involved in the conflict in the world supply of this cereal.
The disorganization of the commodity market, brought about by these events, gave new prices to the cereal. Embrapa’s high and new technologies will allow a boost in wheat production in tropical areas of the country.
The assessment is by Rubens Barbosa, executive president of Abitrigo (Brazilian Wheat Industry Association). According to him, in search of food security, several countries should look to Brazil for investments in this sector.
One of those interested is Saudi Arabia, whose Salic (Sadi Agricultural and Livestock Investment), which invests in projects abroad to guarantee the country’s food supply, has already expressed interest in investing more in Brazil’s poultry and grain sectors. Wheat is on the radar of these investors.
The wheat market will continue with heated prices. Even with the liberalization of grain exports from Ukraine, prices do not immediately return to pre-war levels. And this conflict has no signs of a peace process.
Internationally, prices remain high because freight and insurance are expensive. Internally, commodities suffer the effect of the dollar and the Brazil cost.
There will be a period of adjustment, but that will not happen anytime soon, says Barbosa.
In addition to the effects of the war, wheat is being affected by country-specific circumstances. Several world producers are affected by the drought, and the main Brazilian supplier, Argentina, is no longer expected to produce the expected 21 million tons, but 18 million.
“Despite all this, I do not see any dramatic prospects in the supply of cereal to Brazil, with the exception of market effects, such as freight and insurance. Wheat exists and there will be no supply problem for us”, says Barbosa.
Some countries in Africa and the Middle East, previously dependent on Ukraine and Russia, had to reorient their purchases, including looking for product in the Brazilian market, which is expected to export more than 3 million tons this year.
Agribusiness has been one of the main sectors of the Brazilian economy, but the country needs a lot of planning. For the representative of Abitrigo, such a dependence on raw materials, such as fertilizer, is not possible. The production perspective of this input is long-term, and even so, it is still highly dependent.
The country needs to surround itself with new production technologies. Also, you have to be aware that protectionism is going to be very strong from now on.
For Barbosa, the European Union is starting to propose very tough legislation, and Brazil needs to develop traceability to show that the products do not come from deforested areas.
Assessing the future is also important for this sector. China no longer wants to be so dependent on Brazil. It is going to Africa and raising domestic production.
If Brazilians have had great ease in the foreign market until now, they will need good planning for the future, including looking for new markets.
Brazil has to take some facts seriously and take action on sensitive issues, such as the environment. “The country cannot allow the illicit to continue. This is a fundamental issue and one of the main problems we have.” For the representative of Abitrigo, the government that takes over in January will have to take this matter very seriously.
Wheat is the new thing for Brazilian agriculture, and in five years Brazil will be self-sufficient in the cereal. The country should produce close to 10 million tons this year, coming close to consumption, which is 12 million.
For Barbosa, the evolution of Brazilian wheat production is a matter of food security. Wheat and rice are the most common cereals on the Brazilian consumer’s table, and the industry is concerned about the sector’s current vulnerability.
In the assessment of the entity’s representative, with the evolution of prices, wheat becomes more attractive than corn. Price, new Embrapa varieties and regional diversification of planting will help in the expansion that the country needs.
Barbosa also highlights the evolution of the quality of the Brazilian product, which is gaining acceptance abroad. Domestic wheat is heading to markets in Asia, the Middle East and Africa.
Estimates by Jorge Lemainski, chief general of Embrapa Trigo, indicate that the country should produce 20 million tons of wheat in 2030.
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