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Price of wheat grain and grain flour skyrocketed in Brazil with the inflation generated by the war and the pandemic
A study carried out by the MLB consultancy shows that the price of wheat in Brazil increased by 130% between January 2020 and April 2022.
The price increase was caused by a combination of factors, including the COVID-19 pandemic, fuel inflation and the Ukraine War, which eliminated two of the main suppliers to the wheat market in Brazil, Russia and Ukraine.
This document made by MLB serves as a basis for the review of customers, who assist organizations and companies in the area of milling and baking, that is, areas that use wheat grain in Brazil and are suffering from grain inflation.
The study was carried out by Luiz Carlos Caetano, a market consultant for over 30 years. He calculated the price based on the average price paid to wheat grain producers in Argentina, Paraná and Rio Grande do Sul, which are suffering from inflation and which even have a variety of delivery fees depending on the city of origin and destination.
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“Currently, a ton of wheat is estimated at R$2.000, R$2.100, something like US$400 to US$410, but it has already reached US$465,” said Luiz Carlos.
With inflation, the increase in the price of flour was lower than that of the grain itself
Still according to data from the consultant, wheat flour has increased dramatically in recent times due to inflation in Brazil, however, it has not increased as much as the value of the wheat grain itself. The calculation to arrive at this conclusion was based on the flour that represents more than half of consumption in Brazil. The price of a bag of flour rose much less than the price of wheat itself, although it also rose with inflation. Between January 2020 and April this year, the increase was 117%.
“I'm going to say something that is talked about a lot in the mills, the price of wheat goes up by elevator while the price of flour goes up by stairs, so the price of wheat flour did not increase in wheat. To get an idea, in March flour rose 4% and wheat 14%”, said Caetano.
One of the things that makes this difference is that supermarkets and large industries sign long-term contracts, capable of maintaining prices even with international flexibilities.
According to data that CNN found, items from the wheat sector in Brazil, such as industrialized breads and pies, are higher prices in addition to the signs of inflation, but there are concerns among entrepreneurs in the sector with inflation, which led to a drop in wheat consumption and this drop may be intensified depending on the increase in prices from now on.
Industrialists are also responsible for the high freight costs that accompany diesel. And, in addition, to make matters worse, Russia and Ukraine, respectively, the largest and fourth largest supplier of wheat in the world, had their wheat stocks wiped out with the war.
“This year's inflation has increased by almost 4% so far and products doubled or tripled in terms of inflation until April, as a result of the Ukrainian war, as gasoline prices skyrocketed and oil also does packaging, so there are all these indications. For example, industrial bread, which more than half is multigrain, and wholemeal bread, which uses whole grains other than wheat, also rose together, so there are some factors”, explains Caetano.
India's ban on wheat exports to Brazil reaches 1,8 million tonnes, raising prices
The ban on wheat exports from India has raised 1,8 million tonnes of grain at ports, which may have caused huge losses for traders who now have an opportunity to trade domestically at lower prices, four traders told Reuters .
New Delhi credo wheat exports on Saturday to Brazil, just days after monitoring the delivery of 10 million tonnes this year. The announcement came after heatwave output lowered wheat production, forcing domestic prices to record highs.
The news forced US commodity prices to hit a daily limit of 0,70 cents a bushel on Monday, according to market data.
