Brazil is not expected to make significant imports of soybeans 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 tariff exemption establishes a new ceiling for price levels, which are at record levels in the case of soybeans, following strong exports and high domestic demand. Corn prices also soared.
“However, soybean prices are influenced by international prices and the exchange rate issue will be important for price developments next year”, pondered the state-owned 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 interviewed by Reuters as limiting acquisitions abroad.
The company also said that the Brazilian crop will begin to be harvested at the beginning of next year, which also limits purchases on the foreign market.
At the end of last week, the government decided to zero out the 8% tariff for importing soybeans and corn from outside Mercosur. In the case of cereals, the exemption lasts 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 a limit on prices. Conab's estimate, for now, remains between 300 and 400 thousand tons until the end of December. In January, the new harvest will begin”, he stated.
Limiting the rise in corn and soybean prices in the Brazilian market is important for Brazilian meat to remain competitive, added Conab.
“Without tariffs, import parity means that chicken and pork producers can purchase the main inputs at prices that are relatively equal to those 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.
“In relation to corn, we import mainly from Mercosur member countries, but with the exemption from the TEC (Common External Tariff) we will be able to increase corn imports from the USA”, he stated.
From January to September, soybean purchases by the country have already totaled 528 thousand tons, according to government data, which indicate Mercosur countries, mainly Paraguay, among the suppliers. In the case of corn, purchases by Brazil have already totaled just over 700 thousand tons, with Argentina and Paraguay dominating sales.
DELAY IN PLANTING
Asked about the delay in soybean planting for the 2020/21 harvest due to the drought, whether it could affect productivity in the largest global producer and exporter of the oilseed, Conab said the field team “is aware of the delay, but, for now, it is not impact is visible.”
“In recent years, Brazilian producers have invested in planting capacity and this can also mitigate the initial impacts of this rain delay. Furthermore, adequate management can reduce possible problems in the full development of soybean crops”, he detailed.
For summer corn and cotton, “we monitor carefully whether or not there will be an impact”.
USDA ATTACHES SEE OBSTACLES
The day before, the US Department of Agriculture (USDA) attaché in Brazil published a report in which he said he saw obstacles to imports of US soybeans and corn into the country, citing the level of price “spreads” and logistical and regulatory challenges.
The attaché stated that about a week before the decision related to tariffs 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 this, despite the 20 dollar discount. at 25 dollars of US soybean supply compared to Brazilian soybeans.
Among the regulatory obstacles, the USDA representative highlighted that there are a series of differences between the genetically modified soybean and corn varieties approved in Brazil and the USA.
“There are at least nine biotech varieties of both soybeans and corn commercially available and approved for cultivation in the US that are currently not approved in Brazil,” said the attaché.
“Furthermore, the grain and oilseed port terminals in Brazil are configured specifically for exports, and reverse engineering is time- and resource-consuming,” added the USDA representative, who also mentioned the long distance between the ports and processing units. of soy from the interior of the country, which “increases costs and, therefore, is also a limiting factor.”
Source: Notícias Agrícolas
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