Chicago Stock Exchange corn and soybean futures rose this Thursday, as news about the tightening of regulations on tax credits to industry in Brazil They raised hopes among operators and producers that it could boost the United States’ export business.
Brazilian soy and cotton companies criticized the decree of the Lula Government that imposes new rules for the use of tax credits, claiming that the measure will make companies less competitive in global markets. “That will stimulate business in our direction,” said American Mark Schultz, analyst at Northstar Commodity.
Soybeans on the CBOT rose 1.9% to $440.92 a ton, while CBOT corn rose 2.8% to $177.95.
On the other hand, wheat fell, as traders weighed concerns about drought and frost damage to the Black Sea crop against a rising U.S. crop. The most active wheat contract fell 1.1% to $234.97, its seventh daily decline.
The Brazilian decree sparked a flurry of short covering as traders digested the news. Meanwhile, Brazilian exporters hesitated to sell as a result of the new rule.
The new one was included in an executive order sent to Congress on Tuesday. It comes into force immediately, but needs approval by legislators within four months to remain valid.
“Exporters say closing the tax credit loophole will increase the cost of doing business,” said Tom Fritz, broker at EFG Group.
Spotty rains in the US corn belt, as well as concerns about a heat wave in mid-June have also provided underlying support to the markets.
The US Department of Agriculture reported thatExport sales of old crop corn and new crop wheat were at the upper end of expectations, while sales of old crop soybeans were at the lower end of forecasts. The USDA also confirmed the sale of 152,000 tons of old corn to unknown buyers in a flash sale.
