February 18, 2005

 

 

Brazil's soy market remains quiet As Harvest Picks Up Speed

 

Brazil's soybean market was stagnant this week as low international prices and a stronger Brazilian real pushed demand for soy down, traders said.

 

Traders had expected the market to bustle with activity at the end of the Carnival holiday, but the continued weakening of the U.S. dollar has prompted producers who can afford to retain stocks to continue to do so.

 

A trader in Mato Grasso, a major soy producing region, said that only producers who are tight on cash are selling their stocks. The trader also added that it appears unlikely that the situation will improve n the short and medium term.

 

Still, sentiments are that volumes will rise as the harvest progresses.

 

On exchange rate woes, the Brazilian real strengthened against the dollar, closing at a 30-month high on Thursday.

 

Poor weather conditions have also plagued the country. In southern Brazil, the dry weather season has raised concerns among soy producers who have been reluctant too sell their new-crop soy for fear of crop damage.

 

Weather is expected to cool by next week but weather forecasts show rainfalls still eluding the region.

 

The arid weather has speeded up harvesting in the center-west of the country, with harvesting picking up in the south.

 

Brazil completed 7 percent of its soybean harvest last Friday, up 2 percent from last week, according to local agricultural consultant AgRural.

 

A 60-kilogram bag of soybeans at the Paranagua port stood at BRL31.20 to BRL32.00 Brazilian reals (US$1=BRL2.56) Friday compared with BRL30.00 to BRL31.00 last week.

 

In Ponta Grosso, northern Parana, soybeans were quoted at BRL30.00 to BRL31.00 compared with BRL29.00 to BRL30.00 last week.

 

At Paranagua port, soybean premiums stood at 30 to 40 cents per bushel above CBOT futures for February/March delivery. Soybeans are quoted at 6-12 cents above the CBOT for April delivery.

 

Soy pellets were quoted at US$10-$12 per short ton below CBOT quotes for April delivery.

 

Brazil is the world's No. 2 producer and exporter of soybean.