June 4, 2007

 

Brazil's soy exports slide down amid steady sales

 

 

Brazil's soy exports have failed to impress some multinational soy exporters, but sales remain relatively stable and an upswing trend is expected in early June, brokers and traders said this week.

 

According to one US multinational, Brazil soy exports are down 1.6 million tonnes on the year due to an oversupply of soybeans in the US. This means China is importing from the north and hasn't yet turned its focus on South American soybeans just yet.

 

Steve Cachia, a soy market analyst at grain brokerage firm Cerealpar said he expects two weeks of slow business as exports are behind schedule. However, he believes the trend is going to change over the next few months.

 

Overall, the last two weeks have seen steady business in Brazil once the US dollar dipped below the psychological barrier of 2 Brazilian reals.

 

A trader from a large soy exporter said farmers would rather sell in the spot market and aren't protected in the futures market. Farmers, he said, were scared prices would fall further.

 

Soy prices dipped slightly on Tuesday to US$7.95 per bushel for the July soybean contract on the Chicago Board of Trade.

 

Consulting firm Celeres said Monday that 65 percent of the 2006-07 soy crop has been sold as of May 25, compared to 64 percent last week. The firm is still recommending farmers hold out for higher soy futures in Chicago, speculating on dry weather over US soy fields pushing CBOT soy prices higher.

 

Cachia said Mato Grosso -Brazil's leading soy producing state-has about 15 percent remaining soy to be sold. Cachia said he suspects Mato Grosso farmers are keeping majority of that soy to speculate on rising CBOT soy futures.

 

Local soy prices this week rose for the most part throughout the country, with only some regional declines. Where the prices are rising, declines of a quarter percent in the dollar are having no impact.

 

In towns like Uberlandia in Minas Gerais, soybean prices rose 8.3 percent on the week to BRL30.00 (US$15.76) per bag, making up for dollar drop in the spot market.

 

Regions with low or stable prices have also been compounded with the weaker dollar. In Maringa, a soy town in north Parana, prices were stable on the week at 29.50 Brazilian reals (US$15.12) per 60-kilogram bag, a few cents less than a week ago when converted into dollars.

 

The decrease in local soybean prices was registered throughout all of Mato Grosso, keeping farmers away from their brokers again this week.

Port prices at Paranagua Monday rose to 32.60 Brazilian reals ($16.71) per 60-kilogram bag, up from the BRL32.00 per bag on Friday, in both dollar and real terms, according to brokerage firm Alianca.

 

A broker at Alianca said farmers want BRL33 for the market to move. The broker added that business has been quiet due to fallen premiums and weakening dollar.

 

Alianca states soy discounts were 25 cents under the July soybean CBOT contract, with soymeal discounts 22 cents below the July soymeal contract on the CBOT. Soyoil discounts were 320 cents below the July soyoil contract in Chicago, where they have been for several days. The higher the discount, the less cash farmers receive for their soybeans.

 

Brazil is the world's second largest soy producer after the US.