Brazil wheat imports from Argentina paralyzed by crisis
millers have sufficient stocks until the end of January, grain
analysts and industry sources said Thursday.
Brazilian imports of Argentine wheat have ground to a halt but millers have sufficient stocks until the end of January, grain analysts and industry sources said Thursday.
Brazil, the world's largest wheat importer, normally takes about 95 percent of its supplies from neighboring Argentina which has harvested just over half its crop and is the cheapest source of supply.
"Wheat imports from Argentina have stopped, just like the Argentine grain market," said Marcos Paulo, wheat analyst at Brazilian consultants Safras e Mercado.
Argentina's grain futures market has been closed since Dec 21 and banks have been on an extended holiday. Farmers and grain exporters have been unwilling or unable to do business during the country's political and economic crisis. Food riots last month killed at least 27 people as Latin America's third largest economy teetered on the brink of a record international debt default and popular anger at government mismanagement and fiscal cuts exploded.
Foreign exchange restrictions, imposed by former President Fernando de la Rua and still in place, have blocked export payments. "Farmers prefer to hold onto their wheat while awaiting an expected devaluation of the peso,"Marcos Paulo told Reuters.
Argentina's new President Eduardo Duhalde is due to announce on Friday economic recovery measures, including a possible 40 percent devaluation of the peso. Devaluation could bankrupt millions of Argentines as they would need more pesos to repay home mortgages and other dollar debts, but it would make dollar-denominated commodity exports cheaper.
Brazilian wheat millers said they were worried about Argentine supplies when stocks run out at the end of the month. "But we would only buy elsewhere in an emergency," said one, noting Argentina's large price and freight advantage over U.S., Canadian and Australian competitors. "We're hoping for a return to normality in Argentina and that our stocks will cover the intervening period," added the miller.
Brazil is expected to import less wheat this season due to a much larger crop of more than three million tonnes, compared with a drought and frost damaged crop of 1.6 million tonnes in 2000/01.
