March 14, 2007

 

Soy price drop keeps Brazilian farmers focused on harvest

 

 

A drop in soybean prices on the Chicago Board of Trade on Monday (Mar 12) and Tuesday has kept Brazilian soy farmers out of the market this week, local brokers said.

 

"There was interest on the part of the seller this morning, but once prices started to fall the market kind of deflated here," said Steve Cachia, a soy market analyst for brokerage firm Cerealpar.

 

May soybeans declined in afternoon trading to around US$7.63 per bushel on the Chicago Board of Trade.

 

Brazil-based soy trading companies are relatively fully stocked, which contributes to the slow trade volume over the past two weeks.

 

"Warehouses are full. We have Cargill and Maggi looking in the market in Mato Grosso, but it's for future deliveries at this point," said Paulo Gilioli, a broker for Cerealpar in Mato Grosso, Brazil's no. 1 soy-producing state. Cargill and the Maggi Group are two of Brazil's top soybean trading companies.

 

"No one is racing to buy soybeans this week," said Anderson Galvao Gomes, a soy market analyst for agribusiness consulting firm Celeres.

 

Another reason for the lack of interest inside the farm gate is because falling soybean premiums and a dollar below 2.10 Brazilian reals means international soy prices have fallen more for Brazil's soy growers than their counterparts in the US

 

Soy premiums are 2 cents below the May and July soybean contracts on the CBOT for April, May and June deliveries, according to brokerage firm Alianca.

 

Port prices remain high, closing up to 34.70 Brazilian reals (US$16.53) per 60-kilogramme bag on Monday.

 

"The main activity in Brazilian soybeans at this moment is the harvest," said Helio Sirimarco, a broker at Fator Corretora in Rio de Janeiro.

 

Some areas of Brazil are nearly finished harvesting, while others in the south have yet to begin. Less than 20 percent of Brazil's 2006/07 crop has been harvested at this point. In southern Mato Grosso, harvesting is nearly completed.

 

According to agribusiness consulting firm, Agroconsult, Brazil should harvest over 57 million tonnes of soybeans in this 2006/07 crop. Agroconsult is currently conducting a nationwide crop tour.

 

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