May 9, 2007

 

Brazil's soy market on hold; farmers speculate on US weather

 

 

The Brazilian soy market ground to a halt this week with farmers speculating on US weather conditions and whether they had have an impact on prices before selling, traders said Tuesday (May 8).

 

Soybean futures on the Chicago Board of Trade were trading up in the afternoon at US$7.42 per bushel for July and US$7.72 per bushel for November. CBOT soy futures have been well below the US$8 per bushel price tag of a few months ago.

 

Farmer profit margins have been squeezed even more by the weakening US dollar. The dollar is currently worth just 2.02 Brazilian reals.

 

Brokers and traders at two large multinational soy exporters said farmers were holding out to see if weather news in the US Midwest does anything positive for CBOT soy prices.

 

"We can wait to buy this week and maybe into next, but when you're crushing 8,000 tonnes of soybeans daily and exporting, you can't sit out of the market that long," said a trader at Coinbra, a subsidiary of French trading company Louis Dreyfus.

 

"I think this market here in Brazil is well positioned into July," said a chief trader at a US soy exporter in Sao Paulo.

 

"The situation right now from the buyside is comfortable," the trader said.

 

Meanwhile, no. 2 soy port Paranagua continues to be somewhat bottlenecked, a broker at Alianca Corretora said.

 

With few ships waiting to ship out soybeans, private soy terminals are still packed. That means the exporters located on the port do not need to purchase soy simply because there is no place to put it.

 

"Once space opens, we can see more business," the Alianca broker said.

 

Between Tuesday and May 22, some 370,000 tonnes of soybeans are expected to be loaded. Five bulk freighters are standing by to dock, according to the US trader.

 

"We need to get this soy out of here. We are not exporting as much as I thought we would be yet," the trader from the US company said.

 

Actually, according to government figures, Brazil's soy exports have risen in April in comparison to both the year-ago period and March. April shipments of soybeans were 3.2 million tonnes compared with 2 million tonnes in March and 2.9 million tonnes in April 2006, according to the Foreign Trade Ministry.

 

Soymeal exports have also risen on the month, hitting 1.05 million tonnes in April from the 992,000 in March and the 759,700 tonnes in April 2006, according to government figures released last week.