August 30, 2006

Brazil's soy market endures another slow week as CBOT drops

Brazil's soy market this week endured another slow, gruelling week of trading, with tiny volumes sold and bought, as Chicago futures kept trending downward, the dollar barely budged to just under 2.14 Brazilian reals, and international buyers remained on vacation, said local traders.

"I'd love to say that something happened this week, but nothing has," said Helio Sirimarco, a consultant at Ativa brokerage. "It's been very quiet. Let's see if after Labour Day, things change a bit."

"It's been very slow," said David Brew, an analyst at Rio Grande do Sul-based Brasoja brokerage. "There's always something happening, something being traded, but no great rush. And Chicago prices have been slowly drifting lower for the last month, whch has not helped."

In general, the Brazilian soy market continues to suffer from a convergence of several key factors, which has remained the same for the past couple of months, said local traders.

First, the start of the US soy harvest, combined with expectations of a big crop, has kept world soy prices edging down in the past several weeks. At the same time, falling international prices have left traders disinclined to purchase large volumes of soy from Brazilian producers, even with a government-paid subsidy, Third, more than 90 percent of the current 2005/06 harvest has already been sold, especially in a key centre-south state such as Mato Grosso, which limits deal-making.

"If you've already sold your product, then you're just waiting for a Chicago rally to fix prices," said Sirimarco. "And if you still have product in hand, then you're waiting for something better."