In its latest Grain: World Markets and Trade report, USDA forecasts Brazil wheat production in the 2022-23 season at 9.4 million tons. Thanks to its record supply, Brazil wheat imports are slashed to 5.9 million tons—the lowest in 8 years.

While Brazil is a large wheat producer, it still relies on imports to satisfy demand from its milling sector, especially in northern states where wheat is not grown. Its largest supplier is Argentina, which captured nearly 90-percent market share last year. Argentina’s wheat crop, however, is expected to shrink dramatically in 2022/23 and exports are forecast to decline by over 40 percent from the prior year.

The steep devaluation of the Brazilian real has also impacted traders’ ability to purchase dollar-denominated wheat. With the real currently trading at R$5.04/USD and domestic supplies expanding, mills are less willing to buy international wheat.

With elevated global wheat prices and a devalued currency, selling for export has become an attractive revenue opportunity for Brazilian farmers and traders that partially offsets increased production costs. “Exports will reach record levels for the second year in a row, forecast at 3.5 million tons for 2022/23,” USDA said. “In 2021/22, constrained supplies from the Black Sea allowed Brazil to take advantage of strong demand in the Middle East, Southeast Asia, and North Africa. Exports to top destination Saudi Arabia, for example, were nearly five-fold higher than 2020/21.”

Although Brazil only accounts for a small portion of global wheat trade, its relatively affordable supplies will partially offset large declines in exports from Argentina and India in 2022/23.