April 6, 2004

Brazil Market Quiet As Soy Prices Remain High

Brazil's soy market continued its recent slow spell Monday despite continued record local prices, traders said.
 
Producers took advantage of highs last week but remain more concerned about meeting nearby contracts and hope for further gains.
 
"The tendency is for the Brazilian harvest to get smaller and with this volatile market farmers are taking their chances," said one Sao Paulo-based trader.
 
Brazilian agricultural consultants Celeres lowered its estimate for the local 2003-04 (October-September) soybean crop to 54.03 million metric tons in its latest forecast released Monday, due to continued drought in the south of Brazil and outbreaks of the yield-sapping Asian rust fungus in all the main producing regions.
 
The forecast was reduced from 56.17 million tons in March but is higher than recent local estimates. Two weeks ago, Safras e Mercado lowered its 2003- 04 estimate to 52.28 million tons, while AgRural dropped its figure to 52.02 million tons.
 
Traders said the market was already talking of a crop as low as 50 million tons.
 
"The problems with drought continue in Rio Grande do Sul, intensifying the already substantial losses there," said one trader.
 
Dry weather across practically the whole of Brazil's producing region did, however, aid fieldwork in the last seven days, especially in the south of the country.
 
Brazil's soybean harvest was 57% complete up to April 2, ahead of the 48% collected at the same point last year and the 51% harvested in the last five years, according to Celeres.
 
Soybeans were moving more smoothly at Paranagua port after last month's confrontations. However, lines of trucks did reappear at the port after an accident involving a truck at the port stopped loading from Saturday morning through Sunday morning.
 
Port Superintendent Eduardo Requiao reinforced the administration's non- GMO policy on Friday.
 
However, the National Water Transport Agency, a government watchdog, has given the port until late April to justify its position in face of a court ruling suspending a GMO ban in Parana.
 
Meanwhile, discounts on Brazilian soybeans moved out as the situation in Paranagua remains potentially chaotic and U.S. supply shortens.
 
Soybean discounts for April shipment were quoted at 130 to 150 cents per bushel under the equivalent Chicago Board of Trade futures contract, compared with 110 to 140 cents under last week.
 
At the principal export port of Paranagua, soybeans were trading at around 56.50 to 57.50 Brazilian reals per bag on Monday, stable on a year before, while in Ponta Grossa, northern Parana, soybeans stood at BRL54.00 and BRL55.50, slightly up from BRL53.50 to BRL54.50 last week.