The Brazilian government on Tuesday approved an exemption of the 8% corn import tax, which will apply to a quota of up to 1 million mt and be in effect for six months.
The Brazilian minister of agriculture requested the exemption last week to relieve the feed needs of the Brazilian poultry and pork industries. Brazil’s Safrinha, or second-season production crop, was scheduled to be harvested from May to August, but was damaged due to dry and hot weather. This drought caused the Brazilian government to look for other sources of corn besides Argentina, where heavy rains also damaged the corn crop.
Corn from country members of the Mercosur is already tax-exempt; this exemption was approved to stimulate the purchase of grain produced in other countries, like the US, the Brazilian Ministry of Agriculture said in a statement Tuesday.
The import tax exemption could lead to increased competition between the US and Argentina, a market source said Wednesday, adding that they had been asked by buyers for the past two weeks about shipping US corn to Brazil, with inquires expected to continue.
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The market source did not expect the basis, or the difference between spot and futures prices, to strengthen or weaken due to poor export demand affecting export basis values.
US corn farmers were expecting at least short-term positive implications for the import tax exemption, the US National Corn Growers Association said Wednesday. Front-month CBOT corn futures settled 10.25 cents higher Wednesday to 3.9475 cents/bushel, the highest value since October 7, 2015, when front-month corn futures settled at 3.9575 cents/bushel.
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