May 7, 2008

  

Brazil's soy markets slow as farmers await regional developments

 

 

Brazil's physical and futures soy market trading remained slow this week, analysts said Tuesday (May 7, 2008).

 

"Since most of the soy crop has been harvested and sold, many farmers have already started to pay for next year's fertilizers, and they can afford to speculate with their remaining soy," said Steve Cachia, a soy market analyst at brokerage firm Cerealpar.

 

According to Cachia, soy buyers and sellers are waiting to hear news about whether Argentina's farmers will strike again, and to know whether bad weather in the US will have farmers moving to plant more soybeans instead of corn.

 

If the Argentineans strike, that could move demand for soybeans to Brazil, driving up prices at the ports as discounts contract. Soy futures in South America are based on CBOT soy prices, but also come with discounts or premiums, and are rarely the same price as CBOT soy.

 

On the other hand, if US farmers have to plant more soy instead of corn because of weather issues, farmers there could push prices down as a result. Brazilian farmers are taking a wait-and-see approach to those possible scenarios.

 

July soy futures closed 9 cents lower at US$12.77 a bushel on the CBOT Tuesday.

 

A trader at a major US soy trading company said it bought 28,000 metric tonnes of soybeans on Tuesday for a mix of domestic use and exports, compared to purchases of around 3,000 tonnes on Monday.

 

The soy were bought at discounts of 40 and 45 cents under the July CBOT soybean contract, tempting producers to sell some of their remaining soy. Discounts late last week were offered at 50 to 55 cents under with no seller interest.

 

Another broker said the soy business is quiet, although the likes of the Australian Wheat Board and Cargill bought soy in Brazil's market again this week.

 

Average buyers at Paranagua were offering between 35 and 40 cents under the July CBOT soybean contract, with sellers willing to sell soy at prices 25 under the nearby CBOT contract this week. The difference between what sellers were offering and what buyers were willing to sell led to a business stalemate so far this week.