Analysis shows the importance of wheat in the trade relationship between Brazil and Argentina

It is not only in Brazilian bread that Argentine wheat has an influence. The product also acts in balancing the trade balance with the neighboring country, as revealed in the study The Trajectory of Wheat in Brazil and its Role in Commercial and Institutional Relations between Brazil and Argentina, a compendium released this Thursday (31) by Companhia Nacional of Supply (Conab).

According to the research, the export of Brazilian manufactured goods, especially in the automobile and electrical machinery sectors, is strongly related to the import of grain and its derivatives, which highlights a direct relationship between these commercial movements.

“One of the reasons for this link is due to the fact that the range of products exported by Argentina is not very diversified”, explains Rodrigo Souza, Conab analyst and technical responsible for the compendium. “Almost half of what the neighboring country sells to Brazil is concentrated in 16 products, with wheat grains and wheat flour accounting for approximately 10% of the total purchased in recent years. In the Brazilian case, at least 50 products are needed to reach the same level of sales, due to our great diversity of items for export”, he adds.

The conclusion of the study also points to the supply management framework as another important influencing factor in the market relationship for this cereal between countries. The document records that Brazil consumes around 11 million tons of wheat per year, with Brazilian production estimated at 5,4 million tons for the 2018/2019 harvest, according to the Company's latest survey. The situation confirms the history of data from the Secretariat of Foreign Trade (Secex), which demonstrate that, in the period from 1997 to 2017, around 77% of imported wheat originated in Argentina.

Check out the full analysis of Study Compendium on the Conab portal.