August 5, 2009

Brazilian soy trade was hampered Tuesday (Aug 4) by a pullback in US soy prices and less-than-attractive foreign-exchange rates.

 

November soy closed up just one cent at US$10.31 on the CBOT after a strong rally of 48 1/2 cents Monday (Aug 3).

 

The Brazilian real continued to climb against the dollar, which discouraged Brazilian producers from selling their remaining beans.

 

One dollar slid to 1.82 Brazilian reals from BRL1.83 Monday to hit a fresh 11-month high against the US currency.

 

Still, trade was done Tuesday with some buyers looking to purchase beans for 2010, said William Balbino, a trader at brokerage firm Cerealpar in Mato Grosso, Brazil's No. 1 soy-producing state.

 

Balbino said international traders Bunge and ADM bought around 70,000 tonnes of soy each for delivery in February.

 

Daniele Siqueira, an analyst at consulting firm AgRural, also said Brazilian producers have started to fix contracts for 2010. They see good prices and locked in soy to be delivered in February, Siqueira added.

 

Steve Cachia, an analyst at Cerealpar, said that as the CBOT remained steady Tuesday, Brazilian soy premiums strengthened at Paranagua, the main grain port.

 

Cachia said buyers were looking for 220 cents over the September contract on the CBOT, while sellers wanted 250 cents over the same contract.

 

Premiums strengthened as buyers needed to offer higher premiums to attract sellers when the CBOT didn't move, Cachia said.

 

Leonardo Menezes, an analyst at agricultural consultancy Celeres, said that 86-87 percent of Brazil's soy has been sold. This is about steady from the same period last year, he added.

 

With recent price increases and strong premiums, producers have been coaxed into selling their beans, Menezes said.

 

This is especially true where producers need cash to prepare for the upcoming planting season in September and onward, he added.

 

David Brew, a broker at Brasoja in the south, said if farmers haven't already sold their beans then there is probably a reason.

 

"They can probably afford to hold out, say until February, on the chance that soy prices may rise even more," Brew said.

 

Brazil is the No. 2 producer of soy after the US.