May 6, 2009

                       

 

Although Chinese buyers are less active this week, Brazil's soy trade remains brisk, soy industry participants said Tuesday (May 5).

 

July soy on Tuesday fell 2.50 cents to US$11.01 a bushel on the CBOT on profit-taking following the market's bullish run to seven-month highs.

 

One dollar ended at 2.14 Brazilian real Tuesday compared to BRL2.10 on Monday (May 4) giving the producer more money for their beans in the local currency.

 

"Brazil saw a continuation of the good trade this week driven by the favourable exchange rate on Tuesday and the high prices on CBOT on Monday," a trader at a major US soy exporter said.

 

The trader said that the US exporter was busily buying soy for BRL53.50 per 60-kilogramme bag at Paranagua port on Tuesday. The company did trade at premiums of 50 cents over the July soy contract on Chicago, he said.

 

The Brazilian soy trade has been active, helped by surpassing the physiological US$11 per bushel barrier, said Steve Cachia, grains analyst at Cerealpar.

 

Cerealpar said buyers were offering premiums of between 47 cents and 48 cents over the July soy contract on CBOT for shipment in June. Sellers wanted between 53 cents and 54 cents over the same contract Tuesday.

 

Cachia said that soy premiums have been buoyed by a mix of strong demand from China and concerns about a lower crop in Argentina.

 

The Buenos Aires Cereals Exchange forecasts production of just 34 million tonnes, down sharply from the early expectations of about 50 million tonnes.

 

Concerns over a slight fall of the production in Brazil's Rio Grande do Sul state, the No.3 soy producer, also added to support premiums.

 

Brazil's soy exports soared to 4.4 million tonnes in April - a record for the month. There were 2.6 million tonnes exported in March and 3.3 million tonnes in April last year, the Foreign Trade Ministry said this week.

 

This was mainly driven by heavy Chinese buying in April, soy industry participants said.

 

Although this heavy buying slowed in recent days due to higher prices and replenished stocks, the Chinese will continue to be active buyers in the Brazilian soy market, said a Sao Paulo-based broker.

 

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