September 26, 2007

 

Local traders, export markets vie for Brazil soy

 

 

There seems to be no end to the worldwide demand for soy and Brazil, the world's second largest supplier, continues to benefit from it, brokers said this week.

 

Soy futures for November 2007 settled Tuesday at US$9.73 a bushel on the Chicago Board of Trade, with March and May 2008 soy settling down to US$9.96.

 

"Exporters are still out there looking for soy and China is a main factor," said Helio Sirimarco, a consulting broker for a Rio de Janeiro-based commodities brokerage.

 

Sirimarco said losses to China's own soy crop has them looking for more soy these days from Brazil, more than previously expected.

 

Despite demand, Brazil exported 18.8 million tonnes of soy from January to August 31, compared with 19.7 million tonnes over the same period last year, according to the Transcar Maritime Shipping Agency.

 

There is currently a 15-day delay at the export corridor in Paranagua Port.

 

Bunge has over 100,000 tonnes of soy waiting to load at its terminal in Paranagua, destined for Portugal. Archer Daniels Midland has 116,000 tonnes loading this week at Paranagua, destined for Rotterdam and China. Cargill has three loads over 100,000 tonnes bound for an unlisted charter. Traders said it was likely heading to China. Roughly 50,000 tonnes of soy left the Paranagua Port bound for China this week aboard the Shanghai Venture merchant marine vessel. Another 6,435 tonnes of soybean oil was shipped by Bunge to China this week from Paranagua.

 

Meanwhile, in Brazil's local market, soy crushing companies are paying almost as well, if not better, than some exporters, traders said.

 

"The crushers here are all buying what they can get their hands on. Both the soy industry and the trading companies are willing to push local prices up a bit to entice farmers to sell this week and that's not always an easy task," said David Brew, a broker at Brasoja in Rio Grande do Sul state.

 

According to agribusiness consultancy Celeres, over 90 percent of the old 2006/07 crop has been sold, with around 25 percent of the new 2007/08 crop being sold as at September 21.

 

"Right now exporters are locking in purchase orders for April through September 2008," Sirimarco said, adding that there were no major buyers in the market so far this week, but business was steady.

 

Another problem that analysts at Celeres saw on the horizon was the ongoing farmer strategy to hold on to what is left of the crop to sell for higher prices. Farmers have until March before new soy starts to come on line, and are still very bullish about Chicago and local soy prices.

 

"It is difficult to buy in the physical market for old crop soy these days," said Tiago Simon, a trader at soy-crushing company and exporter, Sperafico Agroindustrial.

 

Soy growers in remote areas in Mato Grosso, the leading soy producing state, are getting around 33.92 Brazilian reals (US$17.75) for a 60-kg bag before expenses. Port prices are near BRL40.00 a bag at Paranagua.

 

"We still have a lot of soy to sell in Rio Grande do Sul, but this is party-time and farmers have about three years' worth of debts to pay off," Brew said.

 

"Farmers are willing to wait for higher prices and buyers are willing to pay for it," Brew said.

 

On September 24, the president of the Brazilian Vegetable Oils Industry Association, Carlo Lovatelli, told Dow Jones Newswires that local soy crushers expected a 63- or 64-million-tonne harvest in 2007/08, a record, provided there were no major weather problems this season.