June 11, 2008

    

Brazil's soy market continues to slow

  
 

Brazil's soy market continues to remain at a slow pace this week, traders and analysts said Tuesday (June 10, 2008).

 

"Despite favourable news from the USDA soy report, soy business remains slow this week compared to last week," said Steve Cachia, a soy market analyst at brokerage firm Cerealpar.

 

The USDA estimated US 2007-08 soy ending stocks at 125 million bushels, down 20 million from the 145 million estimated in May.

 

Soy prices fell 5.50 cents on the CBOTto US$14.46 a bushel for July on Tuesday.

 

The main international trading houses and crushers are buying some soy this week, while producers are selling only on the upside and holding back on the downside, according to Cachia.

 

"There's likely to be more news from the US related to the weather that may help to encourage speculators and raise prices in the coming weeks," he said.

 

Cerealpar said on Tuesday buyers were offering to pay 35 points under the CBOT June soy contract, with sellers willing at 20 points under June. Trade discounts were 20 points under for buyers and 10 points under for sellers of the July CBOT soy contract at Paranagua port.

 

"Buyers and sellers are so far apart that there's no business," said a broker at another Brazilian brokerage.

 

A trader said on Tuesday buyers were bidding for soy at the Port of Santos at an average of 40 points under the CBOT June contract, 25 points under the July contract and 10 points under the August and 10 points over the September CBOT soy contract.

 

David Brew, a broker at Brasoja in Rio Grande do Sul, the No. 3 soy-producing state, added that having sold a large part of their soy, producers are holding onto their remaining soy.

 

"Despite the crazily high prices, farmers are still holding off from selling and only sell small amounts," he said.

 

Brazil has already harvested around 100 percent of the 2007-08 soy crop and the new 2008-09 soy crop gets planted in October.

 

Brazilian soy growers sold 74 percent of the 2007-08 soy by June 6, compared with 72 percent a week earlier and a five-year average of 68 percent, according to farm consultancy Celeres.

 

In Mato Grosso, the country's leading soy-producing state, 90 percent of the soy crop already has been sold, compared with 88 percent on May 30 and 80 percent the year before.

 

The second-largest soy-producing state, Parana, has sold 57 percent of its soy by June 6 versus 55 percent on May 30 and 51 percent last year.

 

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