With Russia and Ukraine — two of the world’s top wheat producers and exporters — at war, the prices of bread in bakeries and foods dependent on the cereal in their production are expected to rise due to Brazil’s high dependence on imports.
How much will it go up? That is uncertain, depending on the duration of the conflict in Eastern Europe and factors such as the behavior of the dollar. After retreating to R$5 on Wednesday (23), the US currency rose to R$5.10 on Thursday (24).
Brazil is one of the largest wheat importers in the world, having to source 60% of what it consumes in other countries, especially Argentina, according to Abitrigo (Brazilian Association of Wheat Industries).
With that, any conflict involving giants in the sector, as is the case of Russians and Ukrainians, shakes the market. This year, shipments to Brazil will total 6.5 million tons, 85% of which will come from Argentina.
“The price of wheat has risen a lot in recent days on the international market, the Chicago Stock Exchange has even closed the wheat area [nesta quinta] because it reached the limit. With Russia being the world’s first exporter and Ukraine the fourth, in the international market the prospect of an increase in the product raised the price in all markets”, said Rubens Barbosa, president of Abitrigo.
Right at the opening of the market in the North American city, wheat reached US$ 9.26 per bushel (27.2 kilos), 5.7% more than the previous day’s closing.
For Barbosa, the forecast is that in the next four or five months the price will continue to rise, to stabilize or fall from July/August, when the harvest in the northern hemisphere will begin.
“But everything will depend on the extent of the war. Wheat is a serious problem, we are dependent on it, very vulnerable. It’s a pandemic, shipping, now this war issue, which has nothing to do with us.”
Despite this, the association does not project the possibility of shortages in the coming months, as negotiations for the current harvest have already been carried out.
Another problem that can make wheat — and other crops — more expensive is uncertainty over fertilizers. Russia is among the biggest producers of potassium chloride and other nitrogenous products for fertilizers.
Researcher at Cepea (Center for Advanced Studies in Applied Economics) and professor at Esalq/USP, Lucilio Alves said that, although the countries directly involved in the war are Russia and Ukraine, prices in Argentina will rise, impacting Brazil.
“International prices rise and Argentina’s prices will rise because, if they do not rise, other markets will start to demand more products from Argentina. This would end up causing a reaction as well,” he said.
To reach the consumer, the price should take “a few weeks or more”, in the assessment of Alves.
“The mill has to absorb and pass on to the wheat derivative itself. In the pass-through, it incorporates other types of costs, so this pass-through is not immediate. Then there’s the wholesale and retail and, only then, does the consumer. national is to have a certain delay.”
The bakery sector projects that the increases that have already occurred in recent months will continue, but still as a result of the exchange rate fluctuation, not the war.
“The mills are holding up prices, they have not yet fully transferred the dollar, and we have also not been able to pass on the price of the increase in flour that occurred. Families’ incomes do not grow. , and our business depends on it”, said Antonio Saú Rodriguez, marketing director at Sampapão, which encompasses a union, association, institute and foundation linked to bakery in 32 cities in the São Paulo Metropolitan Region.
According to him, as the current crop is already bought, if the war does not last long, Brazil may be able to suffer less.
“The problem is that a war we know when it starts, but not when or how it ends”, he said.
For Alves, from Cepea, the proximity of the planting period in Brazil, between April and June, may end up attracting more producers to the market due to the expected readjustments.
“We may have a greater number of producers wanting to enter the wheat area in view of the international scenario. With these prices, it may be favorable to the producer.”
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