U.S. Could Land Some Wheat Export Business from Brazil

There are some things that would have to be overcome in order for Brazil to import some U.S. wheat this year; something that has become rare since the agreement between several South American countries to sell grain between countries with no duty attached to the deals.

While Argentina usually supplies the bulk of wheat to Brazil, this year their production has fallen drastically from last year's 16 million tons to only 10.1 million this year. Of that, last year 10.5 million tons were exported to Brazil, and this year projections are for only 5.8 million tons to be available.

The major disruptions causing the lackluster production for Argentina has been dry weather and less acreage planted in wheat.

A key factor the attractiveness of exporting to Brazil for the U.S. is if Brazil drops its import tax. The U.S. is able to send a high quality wheat with low freight charges, giving them an advantage over its competitors.

If that doesn't happen, U.S. wheat exports don't look too good.

With India making over 2 million extra tons of wheat available for export in their region, and Russia winning North Africa and Middle East contracts, it makes it harder for the U.S. to compete, as there's an abundance of wheat available because of the record crop this year.

The USDA is once again expected to drop its wheat export estimates over the next several months.