August 27, 2008

 

 

Brazil's soy market remains in a quiet spell as producers hold onto to their old soy, said analysts and brokers Tuesday (August 26).

 

"Despite some business on Monday as the CBOT rose, the market is quiet as farmers hold out for higher soy prices," said Steve Cachia, a soy market analyst at brokerage firm Cerealpar.

 

Soy futures fell 2.50 cents to US$13.62 per bushel for the November contract on the CBOT Tuesday, but early day trading was busy in the futures market for Brazilian brokers at least, with commercial clients locking in prices for November 2008 and May 2009 soy on the CBOT, said a Sao Paulo broker at a large commodities hedger.

 

"We did a lot of business on Tuesday, more so than Monday and much more than last week with prices rising at the start of the day," the Sao Paulo broker said about business from Brazilian soy cooperatives and other commercial firms.

 

Soy producers are still looking for around US$14 to US$15 per bushel for the new 2008-09 soy crop before getting more active and they are eager to sell when the market rallies towards these levels, said Cachia.

 

David Goncalves, a soy consultant at FC Stone, agreed that Brazil's physical soy market is at a standstill this week.

 

"Business is quiet as farmers received around BRL50 (US$30) per 60-kilogramme bag back in June and are now getting just around BRL43 and are therefore reluctant to sell," he said.

 

Then again, Brazil has very little soy left in the market. What is left now has to last at least until February. Brazil's 2008-09 crop does not really get harvested until March.

 

Brazil's premiums and discounts for soy Tuesday showed little agreement between buyers and sellers. Buyers at Paranagua were asking for 60 cents over the CBOT September contract, whereas sellers wanted 75 cents over the same contract, showing just how tough it is to get business done in the physical spot market in Brazil these days.

 

Soy bids were 85 cents under the May soy contract on CBOT and sellers were asking for 70 cents under the same contract.

 

The 2007-08 soy crop in Brazil, harvested from March to May, has around 11 percent remaining, said commercial farm consultancy Celeres Monday. Major soy states such as Mato Grosso and Parana have sold 94 percent and 85 percent, respectively.

 

Brazil's 2008-09 soy crop, to be planted in October, was 12 percent sold as of August 24 against a five-year average of 14 percent and 18 percent the year before.