January 11, 2007

Brazil sells 680,000 tonnes of soybeans in auctions

Brazil sold about 17 percent of the 4 million tonnes of soybeans offered in two subsidy auctions Tuesday (Jan 9), the Agriculture Ministry said late Tuesday.

Some 680,000 tonnes were sold in two auctions, known as PROP and Pepro. Of that total, 413,000 tonnes, or 21 percent of the 2 million tonnes offered, were sold in the farmer direct-subsidy auction known as Pepro.

Farmers were more interested in the auction Tuesday than industry, which purchased just 267,000 tonnes out of the 2 million tonnes offered at the second auction, said Joao Paulo Moraes Filho, one of the soy and grain auction coordinators at the National Commodities Supply Corp (Conab) of Brazil's Agriculture Ministry.

Farmers bid at auction for the right to receive a subsidy over the strike price of roughly 22 Brazilian reals (US$10.20) per 60-kilogramme bag of soybeans. The subsidy allows farmers to sell at a higher price than the market is willing to pay in some regions of Brazil's centre-west and northern soy towns.

International soybean prices continue to be favourable for Brazilian growers, despite dropping from highs near US$7 per bushel earlier in December. Higher prices have led to less participation overall in the soy auctions, Filho said. March soybeans closed down at US$6.64 per bushel on the Chicago Board of Trade Tuesday.

The soy auction programme was created last May to help centre-west and northern soy growers who were selling 2005/06 soybeans below the cost of production.

The 2006/07 season is the first time the government has ever offered subsidies to soy farmers prior to harvest.

Brazil is the world's no. 2 soy producer and exporter behind the US.