May 13, 2009

International prices and USDA data failed to trigger much trading in Brazilian soy, and Chinese buyers also remained on the sidelines, industry participants said Tuesday (May 12).

 

July soy was 1.50 cents higher at $11.17 a bushel on the Chicago Board of Trade on Tuesday.

 

"Business has been quiet Tuesday," with little support from CBOT and unclear direction from foreign-exchange markets, said Steve Cachia, a grains analyst at Cerealpar.

 

Tuesday's USDA ending-stocks data also failed to stimulate any business, he said.

 

The USDA estimated U.S. 2008-09 soy ending stocks at 130 million bushels, down 35 million from the 165 million estimated in April. The USDA raised its export estimate by 30 million bushels and the crush by five million to account for the change.

 

The dip on CBOT was also seen in Brazil's local prices, said Cachia. Soy were trading at around BRL52 per bag at the main grain port of Paranagua, below the recent levels of BRL53 per bag.

 

Cachia also said that the soy price on CBOT on Tuesday was a more significant factor than foreign exchange regarding trade. On Tuesday the exchange rate did little to encourage buyers or sellers. One dollar was at 2.06 Brazilian reals.

 

"Trade has been lousy," said a soy broker at a Sao Paulo-based brokerage. Chinese buyers remain on the sidelines and haven't been active for the last few weeks since heavy buying in April.

 

The broker estimated that Brazilian soy prices are 10 cents or 15 cents too high for the Chinese. But they may start buying in a week or so to cover their needs for August, he said.

 

He added that on Tuesday sellers were asking for 60 cents over the July soy contract on CBOT. Buyers were offering 55 cents over the same contract, he said.

 

Brazil has high soy premiums for this time of year because of concerns that Argentina's crop will remain smaller than expected. The USDA data confirmed this Tuesday.

 

The USDA revised its 2008-09 production estimate for Argentina, trimming its estimate by five million tonnes to 34 million. Brazil's 2008-09 output was left unchanged at 57 million tonnes while China's production was lowered 800,000 tonnes to 16.8 million tonnes.

 

Celeres, a Brazilian agricultural consultancy, said producers have sold 61 percent of their 2008-09 soy as of May 8, compared to 58 percent the week before and a five-year average of 66 percent.

 

Analyst Leonardo Menezes at Celeres said trade is currently behind last year as selling was slower due to credit concerns and lower prices last year, which delayed sales.

 

Sellers are currently starting to think about the next harvest and therefore need to raise money or swap their crops to pay for inputs such as fertiliser.

 

Buyers are also keen to replenish their soy stocks as Brazil creeps toward the end of its harvest. Brazil's farmers have already harvested around 96 percent of the beans.

 

Producers are exchanging their beans with trading companies for their products such as fertiliser, he said.

 

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