Annually Brazil consumes approximately 10 million tons of wheat, however the country produced 4.2 million tons because of crop destruction during winter. Brazils’ traditional wheat supplier and co-member of the Mercosur – Argentina, has experienced its lowest wheat crop output in 100 years and will likely only be able to export 2.5 million tons because of bad weather and government limitations on the international trade of grain. In 2012 the U.S. exported 32,000 tons of wheat to Brazil however in 2013 it is expected to sell 3 million tons to the country. In April Brazil enacted a tax exemption for wheat imports coming from countries outside the Mercosur eliminating a 10% import tax. So far the U.S. is the only country with the quality hard red winter wheat that Brazil demands and the trend of the U.S. exporting wheat to Brazil is expected to continue as Mercosur countries have only 6.5 million tons of wheat and Brazil will need to import 7 million tons. With China’s growing appetite for wheat it is unclear when or if Argentina can regain market in Brazil. To ensure continued supply, Brazil has extended the tax exemption for wheat from outside the Mercosur.
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