Yahoo Finance China Scoops Up American Soy After Brazil’s Surprise Tax Change
(Bloomberg) -- A surprise tax change in Brazil, the world’s largest soybean exporter, is prompting Chinese buyers to snatch up US supplies.
Most Read from Bloomberg
Dozens of CVS Generic Drug Recalls Expose Link to Tainted Factories
Stocks Rise as Solid Treasury Sale Spurs CPI Bets: Markets Wrap
Importers in China, the top commodities buyer, purchased at least 208,000 tons of soy since the change was announced last Tuesday, according to data from the US Department of Agriculture. The flash sales were the first transactions of the kind since January.
The purchases highlight how difficult it will be for President Luiz Inacio Lula da Silva to pass the provisional measure, which limits the ability of Brazil’s commodity exporters and processors to monetize some tax credits. Finance Minister Fernando Haddad is already considering withdrawing the decision after drawing the ire of companies and Congress, according to people familiar with the matter.
“China is buying US supplies because buyers in Brazil cannot pass along those higher costs to the farmer,” said Victor Martins, Latin America risk manager for Amius Ltd. “They are paying extra because offers in Brazil are reduced.”
Abiove, an industry group that represents major crop merchants including the storied ABCDs — representing Archer-Daniels-Midland Co., Bunge Global SA, Cargill Inc. and Louis Dreyfus Co. — had already warned the measure would slash profits for soybean processors. Some traders had also withdrawn new offers for commodities such as soybeans and corn from the market.
The US also sold 152,000 tons of corn to unknown destinations in the period, a move some traders also attributed to the tax change.
--With assistance from Clarice Couto and Michael Hirtzer.
Most Read from Bloomberg Businessweek
China’s Economic Powerhouse Is Feeling the Brunt of Its Slowdown
As Banking Moves Online, Branch Design Takes Cues From Starbucks
Food Companies Hope You Won’t Notice Shortages Are Raising Prices
Legacy Airlines Are Thriving With Ultracheap Fares, Crushing Budget Carriers
©2024 Bloomberg L.P.
