August 31, 2010

Brazilian soy trades poor on unattractive prices

Brazil's soy trade was at a drop last week and is expected to remain low this week unless its prices rally.

Brazilian farmers did little trade last week as local prices moved sideways, Steve Cachia, an analyst said Monday (Aug 30). "They will wait to speculate on higher prices and don't have any pressure to sell," he added.

CBOT November soy on Monday (Aug 30) were US$0.04 higher in early trade at US$10.30 a bushel.

Trade Friday was done at around BRL44 (US$25) per 60-kilogramme bag at Paranagua port, Brazil's main grain port, he said. Although this price is above mid-June when prices were at BRL39 (US$22.17) per bag, it's down by one real from the week before.

As a result, most farmers in Brazil who already are well capitalised after selling large volumes of beans can afford to speculate on higher prices, he said.

The largest volumes of unsold beans are in the south of Brazil in states such as Parana, the second soy producing state, and Rio Grande do Sul, the third producer, which traditionally plant, harvest and sell their beans later than Mato Grosso, top producing state.

Cachia said many farmers in Brazil are keeping a close eye on the weather and yields in the US But, in the coming weeks Brazil's supply of beans will become increasingly tight and this may also spur higher local prices.

Brazil ended its 2009-10 soy harvest in May and planting of the new crop will only occur in late September onward.

A chief trader at a major US soy exporter in Sao Paulo also said Brazil's soy trade is likely to continue at a crawl this week. The market has been pretty silent lately as farmers aren't willing to sell at price levels lower than previous weeks, he said.