July 11, 2007

 

Brazil soy prices expensive for buyers this week

 

 

Brazil soy buyers sat out most of the day Tuesday, especially for 2007/08 crop sales, as prices for soybeans, soymeal and soyoil rose, traders said.

 

A trader from Coinbra, owned by Louis Dreyfus Commodities, said there was "no demand" for new crop beans because of high prices.

 

The 2006/07 crop did register volume Tuesday with expectation for more business so long as Chicago Board of Trade soy futures rise faster than the dollar is falling.

 

A trader at a US multinational said about 400,000 tonnes of the 2006/07 soybean crop was likely sold Tuesday.

 

Soy prices are going for nearly 30 Brazilian reals (US$15.87) per 60-kilogramme bag in Mato Grosso this week. Mato Grosso is Brazil's No. 1 producer state, and normally home to some of the cheapest soy prices.

 

Closer to the ports, prices rose Tuesday to BRL 35.00 per bag, from BRL34.00 per bag Monday. Soy futures in the Chicago Board of Trade (CBOT) rose to new highs because of dry weather concerns in the US. 

 

July CBOT soybeans settled 19 cents higher at US$8.89, with November up 18 ½ cents to US$9.20 per bushel.

 

"When the market rises like it has been these days, it takes buyers out of the market because of the price spike. Those who need soybeans are stuck paying big money for right now. We are lucky. We don't need any soy at the moment," said Thiago Simon, a trader at Sperafico Agroindustrial, a mid-sized soy crusher.

 

Despite 2007/08 slowness this week, 2006/07 soy is still selling at reasonable volumes. Roughly 73 percent of the crop has been sold at this time, according to consulting firm Celeres.

 

The dollar and CBOT price discounts will continue to be an inhibitor to trade in the spot market, where most of Brazilian soy business gets done.

 

The dollar broke the BRL1.90 mark this week and is now trading at BRL1.89, with most seeing it falling to BRL1.85 before the end of August.

 

Anderson Galvao Gomes, a senior analyst for Celeres, said in a report to clients Monday that farmers should start locking in futures prices for the 2007-08 crop because he expected price discounts to continue dipping deeper into negative territory, which affects local prices.

 

Brazil soy prices are less than those quoted on the CBOT. In 2004, discounts were as much as $2.00 per bushel below CBOT soy futures for immediate delivery.

 

Soybean discounts are currently 58 cents below the July and August soybean contract on the CBOT, according to brokerage firm Alianca.

 

Brazil is the No. 2 soy producer behind the US.