April 23, 2008

 

Rising soy prices are not enough to bring Brazil sellers to market

 

 

Rising soy prices have not been enough to entice Brazilian soy sellers to market the last few days as much of the new-crop selling heads into its final weeks, brokers said Tuesday (April 22, 2008).

 

According to farm consultancy, AgRural, 67 percent of Brazil's 2007-08 soy crop has been sold as of mid-April. Top farm states like Mato Grosso and Parana have sold 85 percent and 55 percent, respectively, of their soy crops already.

 

Expectations are that Mato Grosso soy will be completely sold by the end of May, giving farmers time to sell at their leisure and speculate on soy futures.

 

Soy futures rose 59 cents to US$13.89 per bushel for the July contract on the Chicago Board of Trade on Tuesday, soliciting hardly a peep out of Brazilian soy producers in both the physical and futures market on Tuesday.

 

"In Mato Grosso business got off to a very slow start this week. There is a lot of soy being delivered to buyers, but these are from old sales. There was no new business getting done on Tuesday," said Silmara Gallo, a broker at Cerealpar.

 

Rumors that Argentina farmers might be taking to the picket lines once again circulated around Brazil soy brokerages on Tuesday. However, recent strikes have not led to any big business boom out of Brazil.

 

What has happened, however, was Argentina's strike pushing soymeal and soy export prices higher, benefiting some sellers.

 

Argentina farmers are threatening to block roads to ports across the country as early as May 2 if talks with the Argentine government break down later this week.

 

Soy discounts at the Paranagua port in Brazil on Tuesday were 60 cents under the May CBOT soy contract on the buy side, with sellers willing to let go of soy at 55 cents under May. Buyers bid 50 under the July CBOT soy contract with no sellers, according to one brokerage.

 

A broker at that firm said that a big buyer over the last few business days, including late last week, was the Australian Wheat Board buying around 100,000 tonnes of Brazilian soy for shipping to Australia.

 

Other than that, "there is not a lot of sellers. Lots of buyer interest, but no sellers in Paranagua," said a broker in Parana state.

 

"What we are seeing are a lot of producers and soy crushers selling futures this week, but not a lot of action in the physical market," said David Brew, a futures broker at Brasoja in Rio Grande do Sul, the No. 3 soy state.

 

"Physical sales are trickling in under small volume because the state' crop is smaller than we thought," Brew said.

 

As a result of the poor weather in pockets of Rio Grande do Sul, the soy crusher industry association, Abiove, revised its 2007-08 crop estimate downward by 200,000 tonnes to 61.3 million tonnes on Tuesday.

 

Abiove also said that Brazil should crush a record 32.4 million tonnes, of which 24.8 million tonnes of soymeal would be produced and 6.2 million tonnes of soyoil would be made.

 

Abiove maintained is soy export estimate of 27.3 million tonnes. Brazil shipped 23.8 million tonnes of soy to world markets last season.

 

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