January 9, 2008

 

Brazil soy market slow after Christmas break

 

 

Brazil's soy market is slow this week, as farmers and traders return from the Christmas break, traders and analysts said on Tuesday (January 8, 2008).

 

"As always the Christmas period has been slow, but with good prices business should start again next week," said Steve Cachia, an analyst at Cerealpar.

 

According to Cachia, farmers in the south have sold only around 25 percent of the new 2007-08 soy crop, whereas farmers have already sold about 60 percent of their soybean in Mato Grosso and Mato Grosso do Sul states.

 

"Subsequently farmers in the south are more willing to sell to get good prices," Cachia said, while farmers in the center-west states of Mato Grosso and Mato Grosso do Sul are more likely to speculate on higher prices to increase their incomes.

 

David Brew, a broker at Brasoja in Rio Grande do Sul, agreed that business has been slow over the last two weeks.

 

Brew said he believes that many farmers are still unwilling to sell and prefer to wait for even better prices, despite historic highs.

 

"Procrastination is the king and he who waits wins," said Brew, noting that farmers are likely to continue speculating next week.

 

Helio Sirimarco, a consultant at Fator Corretora, said that business was quiet during the last two weeks. "It is likely to remain quiet until after the Brazilian Carnival season in February," he said.

 

Sirimarco said farmers are in a strong position, with high prices for the last two crops. But "they will continue to speculate," he said.

 

A trader at a US multinational also confirmed that business was very slow with weak overseas demand, such as from Europe and China, over the last two weeks.

 

Brazil's new soy crop estimate remains relatively stable from previous estimates and should come in at 58.2 million  tonnes, the National Commodity Supply Corp., or Conab, said Tuesday.

 

Cachia said the Conab data is on the low side.

 

"If the weather remains the same as now, Brazil will definitely see a harvest of over 60 million tonnes," he said.

 

Sirimarco said Conab's forecast seems about right.

 

"Although states such as Mato Grosso and Mato Grosso do Sul haven't had any problems, the final numbers will depend on Rio Grande do Sul and Parana states, which harvest later," he said. 

 

Embrapa, one of Brazil's leading biotech research institutions, reported that 58 cases of Asian soybean rust have been discovered in Brazil's new 2007-08 soy crop so far in January, the local Estado newswire reported Tuesday.

 

The new cases this month occurred mainly in the southern state of Parana, and bring Brazil's total to 113, Estado reported.

 

However, according to Brew, Asian soybean rust is not a major concern.

 

"Farmers now can resolve most of the problems by early spraying," he said.

 

Sirimarco said the situation is better than it was two or three years ago.

 

Brazil is the world's No. 2 soy producer behind the US.