Brazilian farmers withhold soy on storage shortage

Soy farmers in Brazil are withholding supplies as a currency rally erodes export profits, leading to a "serious" storage shortage, the head of Latin America's largest farm cooperative said.

"Warehouses are completely full, and we had to rent every facility around to store the crop," Jose Aroldo Gallassini, chief executive officer of Coamo Agroindustrial Cooperativa, said.

Coamo members will vote May 14 on a proposed BRL110-million (US$62.4 million) investment to expand storage capacity to 3.7 million tonnes, from 2.9 million now, he said. The cooperative plans to pay for the investment with cash and seek a 10-year loan from Brazil's BNDES development bank.

Brazil's real has rallied 25% in the past year, the third-best performance of the 16 most-traded currencies, according to reports. The stronger real is eroding profits on soy exports. The price of New York-traded soy futures in local- currency terms has plunged 22% in the past year.

Coamo had to rent additional warehouses this year to store 800,000 tonnes of soy, almost twice as much as in 2009, Gallassini said. Farmers also were forced to assemble "pools," which are temporary storage units with walls made of soy bags that are filled with the oilseed, he said.

Coamo's 22,150 members harvested 3.1 million tonnes of the oilseed this year, up 41% from 2009. The US is the world's largest soy producer.