April 1, 2009

Brazil's physical soy trade was brisk Tuesday (April 1) as prices at the Chicago Board of Trade surged on a US Department of Agriculture report indicating fewer planted acres.

Chicago Board of Trade May soy closed 47 and a half cents higher at US$9.52 a bushel.

Industry participants said the potential for tighter supplies and carryout in the US amid fewer-than-expected acres as well the uncertainty of planting weather pushed CBOT prices upwards.

The USDA estimated US 2009-10 soy planted acreage at 76.024 million acres, below the average analyst estimate of 79.251 million, as well as near the low end of trade estimates at 75.900 million. US soy planted acreage was 75.718 million in 2008. Soy stocks in all positions totalled 1.3 billion bushels as of March 1, a 9 percent decrease from a year ago.

A chief trader at a major US soy exporter said that trade was active Tuesday due to the rally on CBOT propelled by the USDA data.

"We are doing a lot of trade," the trader said.

An analyst at consultancy F.C Stone agreed that trading was strong even though the exchange rate was less favourable than Monday.

One dollar was at 2.30 Brazilian real compared with BRL2.33 on Monday.

"Major traders such as ADM, Bunge and Cargill were buying large volumes of beans," the analyst said.

The analyst said that beans were being traded at between BRL47 and BRL47.50 per 60-kilogram bag in Parana state, the No. 2 soy producer.

Trade was being done for BRL36.50 in Sorriso in Mato Grosso, the No. 1 soy-producing state, he added.

Steve Cachia, an analyst at Brazilian consultancy Cerealpar, said that soy farmers in Parana and Mato Grosso's spot markets were getting up to two Brazilian real cents more for their soy Tuesday than Monday. "Trade has been brisk," he said.

Cachia said buyers were looking for premiums of around 40 cents over the April/May soy futures contract on CBOT at Paranagua, the main grain port.

Brazilian soy farmers were selling especially hard in Parana, where farmers have moved fewer new crop beans. Soy farmers in Mato Grosso, however, have already sold more of their crop, therefore they can afford to sit back and speculate, he said.

Brazilian agricultural consultancy Celeres said that Brazil had sold 42 percent of its new beans by March 27 compared with 40 percent the week before and a five-year average of 57 percent.

Farmers in Mato Grosso had sold 60 percent of their beans, while farmers in Paranagua had sold 19 percent, as of Friday, according to Celeres.

In the south of Brazil, David Brew, a broker at Brasoja in Rio Grande do Sul, the No. 3 soy-producing state, said many farmers have financial obligation or debts to pay at the end of the month. Those may have needed to sell anyway.

"But they could sell as prices went up due to the higher prices on CBOT," he said.

Brazil is expected to produce around 57 million tonnes of soy beans in 2008-09. The harvest is currently around 50 percent complete.

Brazil is the world's No. 2 soy producer after the US.