Russia’s invasion of Ukraine makes wheat more expensive again, but the impact on Brazil should be less; understand

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Producing countries are having a good harvest and the harvest has grown in Brazil. In addition, cereal quotations are lower than in 2022. There is wheat being produced in the world and Brazil has a good crop. REUTERS The price of wheat flour has been decreasing in Brazil since the end of 2022, after rising by more than 30% last year, driven by the rise in cereal prices on the foreign market, which shook after Russia invaded Ukraine. The two countries influence the price of wheat as they are major exporters of the cereal: Russia is the main supplier of the food, while Ukraine is the 5th. Brazil, on the other hand, is more sensitive to market fluctuations, as it depends on other countries to supply its domestic market. After reaching their lowest value in May 2023, wheat prices rose again this week, after Russia suspended an agreement that allowed Ukraine to export grains through the Black Sea. In addition, the country again attacked Ukrainian ports, destroying warehouses with tons of food. The recent chapter of the conflict may raise the following question: will bread become more expensive again in Brazil? Specialists consulted by g1 affirm that the impact, this time, tends to be smaller because: even though wheat prices have increased, prices are still much lower than last year; there is enough wheat being produced in the world, so there is no supply risk; Ukraine has already lost a lot of market share since the beginning of the war, and the trend, so far, is for Russia to continue exporting normally; there will be growth in wheat production in Argentina, from which 85% of Brazilian imports come; Brazilian wheat production is growing and breaking records, which somewhat minimizes the impact on prices. How much wheat rose Wheat prices reached their highest peak on March 7, 2022. Arte/g1 Since the Russians suspended the grain agreement, last Monday (17), wheat prices on the Chicago Board of Trade soared 12% until July 20, to US$ 731.75 a bushel – a unit of measurement equivalent to 27,216 kilos of wheat. Chicago is one of the major exchanges where wheat is traded. Despite the increase, the price of the cereal remains much lower than last year, when the bushel reached a maximum of US$ 1,425.25, on March 7, 2022. What has been driving prices, at this moment, is the uncertainty regarding the consequences of the conflict. “Certainly the end of the agreement is not positive and may have some influence on prices, however, due to the war, Ukraine has greatly reduced its wheat production. Basically it is producing half of what would have been the pre-war level”, says José Carlos Hausknecht, partner-director of consultancy MB Agro. “Moreover, much of Ukraine’s producing region is in the current conflict zone and is under Russian control. Our view is that the impact on the international wheat market will not be large,” he adds. There is wheat in the world The wheat analyst at Safras & Market, Elcio Bento, emphasizes that the recent rise in the price of wheat is very speculative, as there is no risk of shortages. “Right now, there’s a lot of wheat coming in [no mercado]”, he says. “Russia is selling wheat like never before. Even with the sanctions, it has many partners, such as China, which is buying from it”, he adds. Canada, which is the world’s second largest producer, has a good crop, as well as Argentina, which is where 85% of Brazilian wheat imports come from. . Crop in Brazil grew “Brazil produced a record crop [de trigo] and production costs are lower now than in 2022, these two factors together should limit a strong rise in grain prices”, emphasizes Gabriela Farias, economist at Tendência Consultoria Gabriela Farias. little dependence on other countries. This harvest, for example, Brazil should import 5.5 million tons of wheat to complete domestic supply. In the previous season, for example, this import was slightly higher: 6.3 million tons, according to data from the National Supply Company (Conab).

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