March 11, 2009

Brazil's soy trade received a lift from higher international soy prices on Tuesday (March 10), after a period of slow trade, industry sources said.

 

May soybean contracts finished up 8 cents a bushel to close at $8.89 on the Chicago Board of Trade on Tuesday.

 

"CBOT is up (Tuesday) and we have been busy buying beans," the chief trader at a major US soy exporter said.

 

All of the major international traders such as Bunge, Cargill and ADM were active buying good volumes of beans on Tuesday, the trader said.

 

"We have been buying beans in most states such as Mato Grosso (the No.1 soy producer) and Mato Grosso do Sul as well as at the port (Paranagua)," he said.

 

William Balbino, a trader at brokerage firm Cerealpar, said that although CBOT's rise on Tuesday has helped stimulate some trade, overall business has been slow in the past weeks.

 

He said that one dollar, however, dipped slightly against the Brazilian real to BRL2.34 on Tuesday. When the dollar is strong against the Brazilian real, this usually helps to stimulate Brazilian producers to sell because they get more for their crop in the local currency. When the dollar weakens, some of the gains made on CBOT were cancelled, which dampened trade, he said.

 

"Brazilian soy producers have been reluctant to part with their beans as soy prices remain below the prices of a month ago," he said. Beans were being traded in small volumes for around BRL35-BRL36 per 60-kilogram bag in Mato Grosso state on Tuesday compared to around BRL40 per bag a month ago.

 

Balbino said soy buyers were asking Tuesday for 65 cents over the May contract on CBOT to ship between March 15/April 15, with sellers wanting 75 cents over the same contract.

 

Steve Cachia, an analyst at Cerealpar, said most Brazilian soy farmers see a mixed picture with demand still continuing from China for beans, but also a negative international economic climate.

 

Cachia expects a sideward and downward move in prices in the coming weeks as more beans come onto the market from the harvest, which is around one-third complete. The peak harvest months are March and April.

 

Still, Cachia said that most soy producers are willing to risk waiting for better prices. "They only sell enough to cover short-term costs," he said.

 

Cachia added that the buy side is also slow, with trading companies such as Bunge receiving the early beans from farmers in exchange for seeds or fertilizer. "They don't have the need to buy aggressively," he said.

 

National Commodities Supply Corp., or Conab, on Monday issued its latest 2008-09 crop estimate at 57.6 million tonnes.

 

This was slightly more positive than Conab's previous estimate of 57.2 million tonnes in February due to favourable weather. The difference was small and didn't impact prices or trade, Cachia said.

 

Brazilian consultancy Agrural in its latest research Friday said that 37 percent of Brazil's 2008-09 soy crop was sold by the end of February. This compared to 57 percent a year ago and up 8 percent from January, according to Agrural.

 

Agrural said that 46 percent of the beans in Mato Grosso had been sold by the end of February versus 38 percent in January.

 

Brazil is the No. 2 producer of soy after the US.