August 1, 2007

 

Brazil soy premiums seen rising, market stuck on CBOT

 

 

Brazil's s soy market these days has its eyes on Chicago Board of Trade soybean prices and not much else.

 

"Sales now depend on Chicago," said Flavio Franca, a senior commodities analyst for agribusiness consulting firm Safras & Mercado. "The centre-west soy belt is fairly sold out, and the south still has plenty of soy left and will sell on the right price in Chicago."

 

CBOT soybean futures opened higher Tuesday (July 31) amid less favourable US weather outlooks. August soybeans are 6 ¼ cents higher at US$8.29. November soybeans are 5 ¾ cents higher at US$8.53 ½.

 

Brazil's soy market is regional these days, with the southern soy states holding onto most of the beans. Local prices are still favourable all around. They are high in the centre-west because of supply constraints, and in the south as well because of CBOT soy futures. Paranagua soy prices are around 33 Brazilian reals (US$17.55) per 60-kilogramme bag.

 

Premiums are rising into positive territory for nearby deliveries in Brazil, with 2008 premiums improving greatly for March and May 2008 prices. Brazil harvests soy in March.

 

"We could see premiums for 2008 go to 40 under Chicago," said a broker at Alianca Corretora in Parana. "That's driving cooperative interests in selling."

 

Premiums for March 2008 were 50 cents under the March CBOT and 60 cents under the May CBOT. A week ago, they were nearly a US$1 under the CBOT, making soy prices here less attractive for sellers.

 

Some of the large multinationals are well stocked at this time and not needing to buy soy, said a trader at a major US multinational in Sao Paulo.

 

"We are well covered," the trader said.

 

"The south has all the beans and if the demand is asking for it, I am confident they will find a seller at these prices," said David Brew, a broker at Brasoja in Rio Grande do Sul state, the No. 3 soy producing state.

 

Brew said he suspects a slow week unless Chicago prices rose higher.

 

In Paranagua, 50,000 tonnes of soymeal were shipped to France on a Bunge charger this week and another 30,504 tonnes of soymeal were shipped by Louis Dreyfus Commodities on Monday, also going to France.

 

Bunge also has another 90,000 tonnes of soymeal scheduled for shipments to France and Thailand next week, according to the Transcar Maritime Agency.

 

Archer Daniels Midland is loading 44,100 tonnes of soybeans destined for the Netherlands at the Paranagua port this week, according to Transcar. Another 265,500 tonnes of soybeans is waiting to be loaded and scheduled to sail out of Paranagua over the next 11 days. Cargill and ADM are the main charters, shipping beans to China and Europe, Brazil's top two markets.

 

The Paranagua is registering some delays. The Bunge terminal has a two- to four-day delay, and the export corridor is backed up for about a week or two, according to Transcar.

 

"One ship loader broke and had to improvise, so loading has slowed down," said Anderson Pereira of Transcar. "The weekend rain also slowed things down. This kind of back up is normal this time of year."

 

In Santos, the No. 1 soy port, Noble Grain is waiting to load 60,000 tonnes of soybeans, with Cargill leaving the port with 30,000 tonnes on Tuesday, and its destinations are unknown. The ship should sail on Friday.

 

There are three-day delays at the export corridor in Santos, but private terminals there owned by ADM and Cargill are free to ship, according to Transcar.

 

So far, Brazil has shipped 13.4 million tonnes of soybeans from January to June, down from 14.5 million tonnes over the same period last year.

 

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