February 9, 2010

Brazil soy farmers to sell more on strong Chinese demand

 

Brazilian farmers are tempted to sell their soy as the 2009-10 harvest gathers pace.

March soy on the Chicago Board of Trade (CBOT) ended 1/2 cent, lower at US$9.13-1/2 cent, and soy in May settled 1/2 cent, lower at US$9.24- 1/4 cents on Friday (Feb 5).

Brazil's soy farmers started selling good volumes of beans in recent days despite prices and premiums tumbling, said a chief trader at a major US soy exporter on Monday (Feb 8). "The selling is unusual, because prices have fallen in the international and local market," the trader added.

The trader highlighted that "everybody" was buying with all of the main international trading houses active. China, the largest importer of Brazilian soy is also buying strongly.

Brazilian farmers sold more aggressively last week in Parana state, Brazil's No. 2 soy producer as well as other states such as Goias in the centre-west soy belt.

On the other hand, Mato Grosso, No. 1 soy producing state in the country, have seen sales ease after farmers had previously offloaded good volumes of soy in recent weeks.

Mato Grosso's farmers began harvesting in late December and early January, have sold more soy compared to other place. Local consultancy, Agrural said that Mato Grosso's farmers have harvested around 25% of their new soy compared to 8% harvested in Parana.

According to the trader at the US exporter, Brazil's farmers had made fewer future sales this season than last season. As a result, they decided to quicken the pace of sales as soy prices are pressured by Brazil's bumper crop. Brazil's new 2009-10 soy crop is pegged at around 65 million tonnes.

Steve Cachia, an analyst at consultancy Cerealpar, said sales in recent days were mainly due to farmers in regions such as Parana began to harvest. "Many farmers need to sell their newly harvested soy to raise money to pay for expenses," he added.

Cachia said that soy prices were hovering at around BRL38 (US$20.20) and BRL38.50 (US$20.60) per 60kg at Paranagua, the main grain port.