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Conab does not see large purchases of corn and soybeans in Brazil despite tax exemption

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Brazil is not expected to make significant imports of soy and corn from the United States, despite an exemption from tariffs for purchases of the product from outside Mercosur, the National Supply Company (Conab) told Reuters on Tuesday.

According to Conab, the exemption from the tariff establishes a new ceiling for the price level, which are at record levels in the case of soybeans, after strong exports and high domestic demand. Corn prices have also skyrocketed.

"However, soybean prices are influenced by international prices and the exchange rate issue will be important for the evolution of prices next year", pondered the state company, when answering questions by email.

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Conab did not detail the reasons for its assessment of imports, but the exchange rate is seen by analysts heard by Reuters as a limitation on acquisitions abroad.

The company also said that the Brazilian harvest begins to be harvested at the beginning of next year, which also limits purchases in the foreign market.

The government decided to reset the 8% tariff for imports of soy and corn from outside Mercosur at the end of last week. In the case of cereal, the exemption runs until the end of the first quarter of 2021, while for oilseeds it is valid until January 15th.

"For soybeans, large quantities are not expected to be imported in the short term, but rather to limit prices. Conab's estimate, for the time being, remains between 300 and 400 thousand tons until the end of December. In January, it is already beginning new harvest, "he said.

Limiting the rise in corn and soybean prices in the Brazilian market is important for Brazilian meats to remain competitive, added Conab.

"Without tariff, import parity represents, for chicken and pork producers, the purchase of the main inputs at prices in relative equity with that paid by other competitors."

Conab also said that, for soybeans, the USA would be the only country that could export soybeans to Brazil at a competitive price.

"With regard to corn, we import mainly from Mercosur member countries, but with the exemption from TEC (Common External Tariff) we can increase corn imports from the USA," he said.

From January to September, soybean acquisitions by the country have already totaled 528 thousand tons, according to government data, which point out that Mercosur countries are suppliers, mainly Paraguay. In the case of corn, purchases in Brazil have already totaled just over 700 thousand tons, with Argentina and Paraguay dominating sales.

DELAY IN PLANTING

Asked about the delay in planting soybeans for the 2020/21 harvest due to the drought, if it could affect productivity in the largest global producer and exporter of the oilseed, Conab said the field team "is attentive to the delay, but, for now, it is not impact is visualized ".

"In recent years, Brazilian producers have invested in planting capacity and this can also mitigate the initial impacts of this delay in rainfall. In addition, proper management can reduce any problems with the full development of soybean crops," he detailed.

For summer corn and cotton, "we carefully monitor whether or not there will be an impact".

USDA ATTACHMENT SEES OBSTACLES

The day before, the United States Department of Agriculture (USDA) attaché in Brazil published a report in which he said he saw obstacles to US soy and corn imports from the country, citing the level of price spreads and logistical and regulatory challenges.

The attaché said that about a week before the tariff decision was announced, contacts in Brazil pointed out that operators were evaluating the possibility of purchases from North America, but that prices did not contribute to that, despite the $ 20 discount. 25 dollars from the US soybean offer compared to the Brazilian one.

Among the regulatory obstacles, the USDA representative pointed out that there are a number of differences between the genetically modified soy and corn varieties approved in Brazil and the USA.

"There are at least nine biotechnological varieties of both soy and corn available commercially and approved for cultivation in the United States that are currently not approved in Brazil," said the attaché.

"In addition, the port terminals for grains and oilseeds in Brazil are configured specifically for exports, and reverse engineering consumes a lot of time and resources," added the USDA representative, who also mentioned the long distance between ports and processing units. soybean in the interior of the country, which "raises costs and, therefore, is also a limiting factor."


Source: Notícias Agrícolas

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