February 4, 2009

Brazil physical soy trade has slowed to a trickle this week, as international and local soy prices fail to tempt farmers to sell, industry contacts said Tuesday (February 3).

 

Brazilian farmers were keen to sell their beans in January after months of remaining on the sidelines. But after seeing price hikes and favourable exchange rates last month, farmers have returned to more cautious selling, said industry sources.

 

A chief trader at a major US soy exporter said most major traders such as Bunge, Cargill and ADM were still buying beans this week, but they only bought small amounts. "This week the Chicago Board of trade fell and all of the sellers disappeared," the broker said.

 

March soy futures were 17 1/2 cents lower at US$9.42 a bushel on CBOT Tuesday after closing 20 1/2 cents lower at US$9.59 1/2 Monday.

 

The Brazilian real remained stable against the US dollar and did little to lift soy exports. One US dollar Tuesday hovered around 2.32 Brazilian real.

 

There are no new factors to drive the soy prices above US$10 per bushel on CBOT, with even Argentina currently getting rain, the broker said.

 

Steve Cachia, a grains analyst at brokerage firm Cerealpar, agreed lower soy prices on CBOT and in the local spot market failed to stimulate trade this week.

 

"This has lead to a negative sentiment among farmers," he said.

 

The spot soybean price in Paranagua, Brazil's main grain port, dropped to BRL49 per 60-kilogram bag Tuesday compared to BRL53 per bag a few weeks ago, he said.

 

Buyers are also offering good premiums for this time of year, but it isn't encouraging the farmers to sell, according to Cachia.

 

Celeapar said sellers wanted 70 cents over the March soy futures contract on CBOT, while buyers were asking for 50 cents over the same contract Tuesday.

 

Leonardo Menezes, an analyst at Brazilian agricultural consultancy Celeres, said the "good rhythm" of sales in recent weeks has now stopped due to lower prices. The activity had been especially notable in the centre-west soy belt of Mato Grosso, Brazil's No.1 soy producing state, Goias and Mato Grosso do Sul, he said.

 

Brazilian soy farmers might be tempted to start selling more briskly in the coming weeks before the flow of beans into the market from the fields drives down prices.

 

Brazil's soy harvest has started in Mato Grosso, but most of the farmers will start to gather their beans in February and March.

 

Mato Grosso's farmers have harvested around 6 percent of their soy, while Brazil overall has just 2 percent of the beans harvested by January 30, according to Celeres.

 

Celeres also said 30 percent of Brazil's new soy was sold by January 30 compared to 28 percent the week before and a five-year average of 45 percent.

 

Mato Grosso has sold 44 percent of its beans by January 30 from 40 percent the week before, while Parana has sold 17 percent by January 30 steady from the week earlier, said Celeres.

 

Most private estimates put the Brazilian 2008-09 soy crop at around 57 million tonnes.

 

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