Extra-Mercosur tax does not change internal price of corn

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     Porto Alegre, September 1, 2020 – A string of rumors took over the corn market last week. The supposed removal of the extra-Mercosur import tariff on corn and other commodities caused a certain amount of surprise, not because of the measure, but because of the distorted assessments made in the Brazilian market. At first, we must again alert the Brazilian corn market that imports are open. Any company can look for the foreign market to make purchases and try to meet its domestic demand, just as it has always been done with Argentine and Paraguayan corn.

     The poorly conceived news released in one of Brazil’s big newspapers seemed quite targeted and with a completely distorted assessment in the case of corn. Mercosur does not have an import tariff on corn, so the announcement of such a decision is ineffective. The extra-Mercosur tariff derives from an agreement between the countries that make up the bloc and must be withdrawn in an agreement should the neighboring countries be unable to meet a Brazilian demand.

     Brazil used this prerogative in 2016. However, the big issue is not the tariff, which can be easily lifted. The point is that the market wants U.S. corn and, in this case, there is a scientific deadlock with CTNBio. There is corn in Argentina and Paraguay, and we do not see any need at all for extra-Mercosur measures. In fact, there is also corn in Brazil, which will carry stocks for 2021. The attempt to impose news about imports must facilitate purchases by trading companies in the domestic market for exports, besides discouraging the next summer’s planting.

     Agência SAFRAS Latam

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