September 2, 2009

Brazilian soy sales continued to lag as international prices stumbled on Tuesday (September 1), according to soy industry participants.

 

The Chicago Board of Trade September soy contract tumbled 86 cents, or 7.8 percent lower, at US$10.14 per bushel on Tuesday, after falling 35 3/4 cents on Monday.

 

"With prices falling, most farmers aren't willing to sell their beans," a chief trader at a major US soy buyer said.

 

"Although we managed to purchase 2,000 tonnes of [2008-09] soy from Mato Grosso state on Tuesday, trade is almost at a standstill," the trader said.

 

Most Brazilian farmers have already sold the bulk of their 2008-09 beans and are unwilling to fix prices for the new 2009-10 crop at current prices, the trader said.

 

Brazilian agricultural consultancy Celeres on Tuesday said that the coming 2009-10 soy crop is 13 percent sold as of Aug. 28, compared with 11 percent a week earlier and steady with a five-year average.

 

Brazil's soy farmers also have sold 91 percent of their old 2008-09 soy crop as of Aug. 28, up one percentage point from a week earlier, said Celeres.

 

Trade should pick up in January, when the first beans start to arrive from Mato Grosso state, Brazil's No. 1 soy producer, he said. Brazil is currently in its soy inter-harvest period.

 

Aedson Pereira, an analyst at consultancy AgraFNP in Sao Paulo, said that a double blow of lower international soy prices and an unfavourable forex dampened trade this week.

 

The Brazilian real has strengthened against the dollar by over 20 percent since mid-March. One dollar rose to BRL1.90 on Tuesday.

 

A few local crushers have been willing to buy soy, but trade is in small volumes, Pereira said.

 

Buyers were offering 120 cents over the September soy futures contract on CBOT Tuesday, while sellers wanted 140 cents over the same contract with little trade being done, Pereira said.

 

Steve Cachia, analyst at consultancy Cerealpar, said that soy were being traded in the spot market at around BRL49.50 (US$25.83) per 60-kilogram bag at Paranagua, the main grain port. This compared to BRL49.50 per bag on Monday and BRL51 per bag on Friday, he said.

 

Brazilian farmers had hoped that recent frost warnings in the US would have helped to push up prices, but the weather forecast currently looks good for crop development, Cachia said.

 

Cropcast Weather Services said Tuesday's 15-30 day outlook calls for above normal temperatures in the US northern and eastern Midwest, with frost risks low in the central and US eastern Midwest.

 

As a result, Brazilian farmers will hold onto their beans for target prices of around US$10.50 per bushel, he said.

 

Brazil is the world's No. 2 soy producer, after the US.

 

US$1 = BRL1.91 (September 2)