January 30, 2008

 

Excessive rainfall in Brazil may delay soy deliveries, lower soy quality  
 

 

Excessive rainfall in Mato Grosso state could result in delays of new soy deliveries to soy crushing facilities and crop losses, analysts said Tuesday (January 30, 2008).

 

"We are getting a lot of rain, and farmers are having an impossible time harvesting in some parts of the state. If this keeps up, you could see some crop losses being declared in a week or so," said Thiago Simon, a soy buyer at mid-sized soy crusher Sperafico Agroindustrial in Mato Grosso.

 

Mato Grosso is the country's leading soy producing state. Only 1 percent of the crop has been harvested at this time, according to agribusiness consulting firm, Celeres.

 

"Soy is being harvested with excess humidity right now, and that cuts into the price farmers get," said Daniel Sebben, a soy market analyst at consulting group, AgRural, in Mato Grosso.

 

Excess water content in soy hurts the quality of the soybean and leads buyers to offer less than they would under optimal conditions.

 

As it is, soy trade in the center-west soy belt is relatively stable this week. Over 60 percent of the Mato Grosso crop has already been sold as of Jan. 25, outpacing the national average of 49 percent.

 

Buyers are looking for $21 per 60-kilogram bag in Mato Grosso, while farmers are seeking around $21.50.

 

"In our area, we are paying 41 reals ($23.16) and not having any problems getting farmers to agree on that price this week," Simon said.

 

According to one U.S. multinational soy trader, soy discounts were 20 points under the March soybean contract on the Chicago Board of Trade on Tuesday and 55 points under the May CBOT soybean contract.

 

March soybeans settled at US$12.53 on Monday in Chicago, and May settled at US$12.72.

 

"We are seeing physical market sales at these prices in the center-west, with nothing going on in the south," said a trader at the U.S. multinational.

 

"People are showing some concern over the rain, and that is definitely tripping up spot market sales for immediate delivery. Soy crushers are well stocked," said Silmara Gallo, a broker at Cerealpar in Mato Grosso.

 

Rain is expected until Feb. 13 over much of Mato Grosso's soy producing regions, according to local weather service, Somar.

 

Brazil is expected to harvest around 58 million tonnes of soy in the 2007-08 crop, according to the National Commodities Supply Corp., or Conab.