July 4, 2007

 

Brazil soy farmers speculating on higher prices this week

 

 

Brazil soy farmers are feeling good about higher soy prices and willing to sit out business Tuesday (July 3) after a busy Monday (July 3) and booming Friday (June 29), brokers said.

 

"The only thing happening today is corn sales because farmers know they are sitting on gold again with soybeans," said a broker from Alianca Corretora in Parana state, one of Brazil's top soy producers.

 

Soy futures on the Chicago Board of Trade are expected to rise in response to lower US soy acreage, announced last Friday.

 

Most of the activity Monday, however, was farmers consulting with brokers and traders about where CBOT soy futures were headed and what the risk was for holding out for higher prices.

 

Last week ended on a high note and Monday business was active in Brazil, but Tuesday has slowed in anticipation of the Independence Day holiday in the US and a desire to bet on higher soy futures, said a trader at a US multinational soy exporter.

 

Tuesday, the National Commodities Supply Corp, or Conab, released what is likely its final crop estimate for 2006-07, putting it slightly over 58 million tonnes. Conab officials didn't wish to wager on 2007/08 planting intentions, but the general consensus at this point is around a 5 percent increase over the 20 million hectares planted in 2006/07.

 

"We are looking at soy to expand by 5 percent around here, maybe more if prices keep rising," said Januario Turcatto, a sales manager at Comacel, a farm cooperative in Rio Grande do Sul, the No. 3 soy producing state. All of its soy from 2006/07 has been sold. Comacel harvests around 3,500 hectares of soybeans.

 

A total of 71 percent of the 2006/07 soy crop has been sold as of June 29 compared to 70 percent in the week ending June 22, according to Celeres, an agribusiness consulting firm. Sales are slightly below Brazil's five year average of 72 percent sold at this time of year.

 

Celeres is recommending its farmer clients sit on their soybeans until the second half of the year.

 

On Monday, Celeres said that Brazil should crush around 29.2 million tonnes of soybeans from the 2006/07 crop, up from 29.1 million tonnes estimated in June. Exports remain stable at 25.5 million tonnes.

 

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