June 27, 2007

 

Brazil's soy sales delayed this week while soy exports rebound

 

 

Sales of Brazilian soybeans in the physical market stalled again this week despite a slight recuperation of soybean prices on the Chicago Board of Trade (CBOT), analysts said.

 

"Producers have the high soy prices of three weeks ago in their heads," said Flavio Franca, a soy market analyst at consulting firm Safras & Mercado. "They weren't that aggressive back then, so imagine now."

 

Soy prices started to dip last week but rose slightly on Tuesday (June 26). July CBOT soybeans were 2 1/4 cents higher at US$8.06 and November soybeans are 3 cents higher at US$8.41 in early afternoon trading. Prices were closer to US$9 a bushel last week.

 

The dollar prices aren't the problem. It is the discounts and the strong Brazilian real (BRL) that farmers are paying attention to these days. Buyers at Paranagua on Monday (June 25) were paying BRL32 or US$16.49 per 60-kilogramme bag compared with BRL34.00 last week.

 

"That's two reals less per bag in less than a week," said Steve Cachia, a soy market analyst for brokerage firm Cerealpar. "Only those in desperate need of cash to pay bills will be doing any business on Tuesday (June 26)."

 

The dollar has been holding relatively steady at BRL1.95.

 

Some 70 percent of Brazil's 2006/07 crop has been sold already, according to Celeres, a consulting firm. The figure is on par with previous soy harvest sales, but there is one caveat. Farmers are selling more volume - as a result of a larger crop - and selling at higher prices. They have the money and can speculate on US weather pressuring soy futures in Chicago.

 

Exports are now on track, said a trader at a US multinational.

 

"The physical market for new business is doing nothing, but exports have finally come back from the dead," he said.

 

Some 99,600 tonnes of soybeans are being loaded at the Paranagua Port in Parana state on Tuesday, estimated to sail for Europe either Tuesday or Wednesday, according to Grano Logistica, a shipping operator. Another 10 ships out of the 14 ships waiting to dock are expected to load soybeans or soymeal in the days ahead. Shipping dates weren't posted. Most soy is going to Europe with some unlisted chartered destinations by Agrenco. Market sources said some of those vessels, carrying a total of 60,500 tonnes of soymeal and 11,500 tonnes of soybeans, are heading to China.

 

Cargill has a 60,000 tonne soybean load booked for later this month to France out of Paranagua while Bunge has another 60,000 tonnes of beans for Spain and ADM has 60,000 tonnes scheduled for the Netherlands in early July, according to Grano.

 

Although it is still too soon to pinpoint Brazil soy growers planting intentions, Anderson Galvao Gomes of Celeres said that Brazil will likely plant around 22 million hectares. Brazil planted 20 million hectares in the 2006/07 crop.

 

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