January 11, 2006

 

Brazilian soy harvest from good weather to drive prices lower

 

 

Brazilian soybean prices fell following a drop in international soybean values under US$6.00 a bushel as beneficial weather is seen in South American growing regions.

 

"Prices are going to keep falling as we have very good news on weather conditions in Argentina now, and Brazil's soy crop continues to progress well," said Andre de Bastiani, market analyst at commodities research firm AgroConsult.

 

"South America is going to drive the international market prices now," de Bastiani said. "There's no forecast for better prices in the near term."

 

Unexpected rains fell in dry areas of Argentina over the weekend and with it prices at the benchmark CBOT dipped under US$6.00 a bushel for the spot January and most-active March contract.

 

Prices fell on the Paranagua port on Tuesday to 30.50 real (US$11.73) per 60-kilogramme bag, compared to 31.50 real Monday.

 

Premiums paid at the principal soy shipping ports rose to 25 cents a bushel over the CBOT for March delivery at the Paranagua Port, compared to 23 cents on Jan 9.

 

May deliveries out of the same port rose to 7 cents over the CBOT, compared with 5 cents on Jan 9.

 

With the CBOT falling this week, premium prices for soybeans are expected to rise again as beneficial rains continue to fall over key growing areas.

 

"It's raining in Rio Grande do Sul and Parana. It's raining in Mato Grosso do Sul. The weather is really good for this crop," said Seneri Paludo, an analyst at commodities research firm, AgRural.

 

"We have had a tough week buying because of rain in Mato Grosso, but compared with last year our volume is similar to a little better," said a trader at US multinational in Sao Paulo.

 

In other news, Brazilian soybean stocks have fallen to 2.7 million tonnes, according a report released Tuesday by the Brazilian Vegetable Oils Industry Association (Abiove).

 

Dwindling supply from the small 2004/05 crop of roughly 51 million tonnes has slowed bean and meal export business in November, the last month for data.

 

In the report, Abiove said it expected production for the 2005/06 soy crop to come in at 57.4 million tonnes, up from its previous estimate of 57.1 million tonnes.

 

Good weather conditions and plant development led to the upward adjustment.

 

Most soy growers will begin the 2006 harvest in March, with some areas in the centre-west soy belt collecting late next month.