April 8, 2009

Higher prices at the Chicago Board of Trade this week enhanced Brazil's physical soy market, industry sources said Tuesday (Apr 7).

Although the most-active and nearby May soy fell 4 1/2 cents to US$9.89 1/2 a bushel on the CBOT on Tuesday, soy producers were still willing to sell their beans as soy hovers near US$10 per bushel.

"All of the major companies have been buying soy like mad this week as producers sell due to the attractive prices," a chief trader at a major US soy exporter said.

Brazil saw strong trade at the start of January, but then business tapered off in February and early March. Now, however, business has picked up. Brazilian soy trade has been active for the last few weeks as the CBOT helped, with buoyant local and international soy prices, the trader said.

One US dollar was at 2.21 Brazilian reals Tuesday, near Monday's level.

Brazilian consultancy Celeres said that 45 percent of Brazil's new 2008-09 soy have been sold as of Friday, compared with 43 percent the week before and a five-year average of 59 percent.

Celeres said Mato Grosso, the No. 1 soy-producing state, sold 64 percent of its beans as of Friday (Apr 3) against 60 percent the previous week. Parana, the No. 2 soy producer, sold 20 percent of its soy crop. Rio Grande do Sul, the No. 3 producer, saw 18 percent of its beans sold, according to Celeres.

"We are seeing good business this week," said Steve Cachia, a grains analyst with local consultancy Cerealpar.

International soy prices have been reflected in the Brazilian market, and buyers Tuesday were paying around BRL49.50-BRL50 per 60-kg bag at Paranagua, the main grain port. This was a slight improvement from around BRL49 per bag on Monday, he said.

Cerealpar said buyers were looking for premiums of around 38 cents over the May soy futures contract on the CBOT at Paranagua. Sellers wanted 45 cents over the same contract.

Cachia said demand remains steady from markets such as China for Brazilian soy, especially as South America's crop has been trimmed by the dry weather.

Many Brazilian producers - who are still speculating on higher prices - will hope that soy prices are lifted by the USDA's monthly revision to supply and demand balance sheets on Thursday, he said.

A broker at a Sao Paulo-based brokerage said that, although the crop estimate from the National Commodities Supply Corp., or Conab, on Tuesday means more soy in the market, it didn't affect prices.

The estimate of 58.1 million tonnes of soy is slightly above Conab's previous estimate in March that put the soy crop at 57.6 million tonnes for 2008-09, compared with 60 million tonnes from the 2007-08 soy crop.

The new soy crop estimate is in line with most analyst expectations, the broker said.

Celeres said that 61 percent of the Brazilian soy crop was harvested as of Friday, compared with 52 percent a week earlier.

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