March 7, 2007

 

Slow week seen for Brazil's soy trade amid global price decline

 

 

Commodities brokers said they expected a slow week in Brazil's soy market as international soybean prices decline along with the US dollar.

 

Soy prices closed down to US$7.47 per bushel for the May contract on the Chicago Board of Trade on Tuesday, and the US dollar reversed days of strengthening and was trading at 2.117 Brazilian reals. The dollar closed at BRL2.134 on Monday.

 

"At this point, with prices falling and the dollar falling, our farmers are taking a wait-and-see approach," said David Brew, a broker at Brasoja in Rio Grande do Sul.

 

Rio Grande do Sul farmers tend to sell on harvest and not into the futures market. Just 1 percent of the state's 9.5 million tonne crop has been harvested, according to agribusiness consulting firm AgRural. Rio Grande do Sul is the no. 3 soy-producing state behind Parana and Mato Grosso.

 

AgRural said Tuesday that 25 percent of the 2006/07 crop has been harvested as of March 6. Also on Tuesday, the government released its soy crop estimate and put it at 56.7 million tonnes, up from 56.3 million tonnes in its previous estimate.

 

"Farmers right now are concentrating on harvesting. There's very little activity going on this week," said Helio Sirimarco, a broker at Fator Corretora.

 

No trade was registered Tuesday in Mato Grosso do Sul, with small volumes negotiated in Mato Grosso and roughly 2,000 tonnes negotiated at the Paranagua Port in Parana.

 

Paranagua Port prices remain favourable at BRL34.30 (US$16.25) per 60-kilogram bag this week, rising from around BRL30.50 last week.

 

Premiums for soybeans for May were 1 cent over the May soybean CBOT, with soymeal premiums at 20 cents below the May CBOT price. Soyoil premiums remain relatively stable this week at 300 cents below the May soyoil CBOT price, according to brokerage firm Alianca Corretora.