Fundamentals push wheat by-product prices up

The price of wheat in the Brazilian domestic market rose 10% compared to the same period last year. The reasons for the increase are strongly grounded on three factors: first the brazilian currency weakening against the north american dollar, based on the welfare reform and macroeconomic factors (Dollar benchmarks the product globally).
Second, after Argentina announced the suspension of the cereal exports by the end of FEB prices sky-rocketed, rising 26% from 190 to 240 usd/ton.
And third, climate conditions caused Wheat domestic production to decline in February to almost 1M tons below the estimates. Flour prices are expected to rise 15-20% average, some sources forecasted.

When purchasing wheat from countries outside Mercosur, there is a 10% charge on the Common External Tariff - Brazil can import only 750 thousand tons per year without the tax. Solution will be to pay higher premiums from North America (US-Canada) and the Black Sea (Russia-Ukraine) market origins .