August 20, 2004

Soy Prices To Impact Brazil's Producers

Brazil, a leading exporter of soybeans and key competitor with the US, is worried that rising production costs for soybeans could eat into local farm profits next season, while global stocks rise according to fresh figures from the US government.

Agriculture minister Roberto Rodrigues said he would wait to see if international prices reacted in the next couple of months before deciding which steps the government would take to ensure production.

America Soy Association reports that the price of imported crop inputs has risen by up to 30 per cent since last year because of international price hikes and rising freight rates.

Rodriguez added that Brazil, along with the US and Argentina, has formally asked major soybean importer China to loosen sanitary rules governing the importation of soybeans.

Brazilian soybean exporters have severely suffered as a result of China's stringent rules that saw the Chinese authorities temporarily banning imports of Brazilian beans from up to 23 trading companies between April and June, after a small number of fungicide-tainted seeds were discovered.

Fresh figures from the August WASDE (World Agricultural Supply and Demand Estimates) report released last week by the US government suggests that wheat, corn and soy stocks should rise significantly this year on the back of improved harvests across the globe.

Fifteen year high global prices for soybeans have squeezed the margins and sliced into profits for many ingredients suppliers and food makers operating into today's global market. However an increase in global stocks - by 3.2 million MT and a 7 per cent rise on last month's WASDE estimate - could equate to a relief in prices.