February 14, 2007

 

Brazil's soy market active; farmers watching rains, harvest

 

 

Brazil's soy market was a little more active on Tuesday (Feb 13) than it has been in the last 10 business days, with buyers and sellers both expressing interest in March and May soy prices in the spot market, traders said.

 

"I'd say farmers are busy selling today, but the volumes are not intense. Farmers are more interested in the harvest still," said a trader at a US multinational in Sao Paulo.

 

Prices were being fixed for March and April deliveries, Brazil traders said.

 

March soybeans were trading higher Tuesday at US$7.53 3/4 per bushel in afternoon trading on the Chicago Board of Trade.

 

"The spot market has been quite busy, with all new business," said Steve Cachia, a market analyst for grain brokerage firm Cerealpar.

 

According to agribusiness consulting firm, AgRural, some 46 percent of Brazil's estimated 57.5 million tonne 2006/07 crop has been sold as of Feb 13. Another 7 percent has been harvested nationwide. In some states, principally Mato Grosso, 66 percent has been sold already. Mato Grosso is the first state to harvest each year and is Brazil's no. 1 soy producer, expected to harvest around 15 million tonnes.

 

Rains are starting to cause a major problem in Mato Grosso, however.

 

"Deliveries are difficult to say the least. We've only been able to truck out around 400 tonnes of soy to ports when we usually ship out about 2,200 tonnes," said Jose Sirlei, logistics manager for Sperafico Agroindustrial, a soy crusher in Mato Grosso state.

 

At this point, mostly everyone in the market is expecting rains to cut into Mato Grosso's soy crop, with early estimates saying a 10 percent cut is likely.

 

However, good weather is said to increase yields throughout the entire south and north-east, so it remains an unknown whether losses in Mato Grosso will reduce Brazil's overall soy production, said Fabio Meneghin, a soy market analyst for consulting firm, Agroconsult.

 

"Right now farmers are concentrating on the harvest, or we'd have a bit more business. Business is getting done, but we have to remember that a lot of the sales have been made already and these farmers are well capitalised," said Helio Sirimarco, a broker at Fator Corretora in Rio de Janeiro.

 

Port prices at Paranagua were 34.70 Brazilian reals (US$16.52) per 60-kilogramme bag on Tuesday, according to Fator, with sellers asking for BRL35.00.

 

Buyers and sellers are more in agreement on prices this week than they have been in the last two weeks, according to Cachia.

 

Soy premiums have been holding steady all week, thus far. March soybean premiums were 18 cents over the March soybean contract on the Chicago Board of Trade. April delivery soybeans were 2 cents over the March CBOT, according to brokerage firm Alianca Corretora on Monday.

 

Soymeal premiums rose four points on Monday to 4 cents over the March soymeal contract on the CBOT and soyoil premiums were unchanged at 300 cents below the March CBOT soyoil futures price, Alianca said Monday.

 

Brazil is the no. 2 soy producer behind the US.