Brazil has cut import tariffs on 1 million metric tons of wheat from outside the Mercosur trade bloc in order to ensure domestic supply and to keep prices down.
Millers will have until Aug. 15 to import wheat free of the 10% tariff from the U.S. and Canada.
Brazil is one of the world's biggest wheat importers, traditionally relying on Argentina for most of its supplies.
But losses to the Brazilian 2013 harvest combined with lower production and limited availability from Argentina, Uruguay and Paraguay, which make up the other members of the Mercosur trade bloc, has forced Brazil to look elsewhere.
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The tariff was lowered last year, but Brazil decided to lower it again in order to tide over stocks until the 2014 crop starts reaching market.
Brazil imported 947,000 metric tons (mt) of U.S. wheat, on which a 10% tariff was paid, in the first five months of 2014, up sharply from 225,000 mt in the same period one year before, according to government figures. In contrast, imports from the Mercosur cropped from 2.7 million metric tons (mmt) to 1.5 mmt in the same period.
Brazilian wheat production is expected to bounce back in 2014, after frost hurt output last year. The Agriculture Ministry forecasts a 33% jump in output to 7.4 mmt.
However, a crop of that size is not yet guaranteed.
Unseasonably heavy rains have delayed planting in the southern state of Rio Grande do Sul, where planting is only 35% complete compared with 55% at the same point last year.
The moisture is benefitting the crop in the ground in neighboring Parana state, but fears are growing that persistent rain during harvest could damage the crop.
Thankfully, weather projections do not include late-season freezes, similar to those which cut output last year.
The Agriculture Ministry expects total imports to fall from 6.7 mmt in 2013 to 5.5 mmt in 2014.
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