Brazils, one of the largest grain importers of the world, is planning to cut import duty on wheat due to the shortage of the commodity driven by damage caused to the domestic crop by record rains in its major producing region.

The speculation, which comes only two months after Brazil’s farm
ministry lobbied for the tariff to be raised to 35%, follows a poor
harvest in the key grain state of Parana, where production is estimated
at 2.8m tonnes, 20% below initial forecasts.

Brazil’s wheat shortfall is estimated at nearly 7m tonnes for 2009-10,
compared with 4.7m tonnes the year before, according to US estimates.

While Sao Paolo has historically filled the gap by importing wheat from
Argentina, a persistent drought, and a dash to grow more-profitable
soybeans, have slashed available supplies in the Brazil’s southern
neighbor.

There is renewed speculation that the government of Brazil may consider
temporarily lifting the common external tariff, a report from US
officials in Sao Paolo said.

Imports from outside Mercosul, which are typically a trickle, would
jump to 2m-3m tonnes, presenting an opportunity to North American
producers.

Source: Commodity Online

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