September 30, 2009

Brazilian soy trade remains at a snail's pace with local crushers closing due to a shortage of beans, industry specialists said on Tuesday (September 29).

 

November soy futures on the Chicago Board of Trade Tuesday are 2.5 cents lower at US$9.17 a bushel.

 

"Trade is practically dead at the moment," said Steve Cachia, a grains analyst at consultancy Cerealpar in Parana.

 

Cachia said that although beans are still available, Brazilian farmers are unwilling to sell. Prices on CBOT dropped this week and the exchange rate is unattractive, Cachia said. One dollar is at 1.79 Brazilian real on Tuesday.

 

Cachia also said that some Brazilian soymeal and soyoil crushers are shutting their operations for maintenance as a result of the tight supply of beans in the local market. They usually don't close for maintenance until the end of the year.

 

Brazil's supply of beans in the local market is tight this year as a result of the smaller crop and strong demand for exports to mainly China, Cachia said.

 

Glauco Monte, a risk consultant at FCStone, said crushers have been closing in the soy growing region of Ponta Grossa in Parana, Brazil's No. 2 soy producing state. Monte said that of around half a dozen crushers, only one or two remain in operation.

 

Monte said crushers could restart their crushing operations in November or December.

 

Monte said that buyers Tuesday want to pay premiums of around 55 cents over the March 2010 soy contract on CBOT. Sellers, however, wanted 65 cents over the same contract.

 

Exporters also aren't aggressive this week because buyers prefer to purchase beans at better rates from the US, he said.

 

Leonardo Menezes, an analyst at local consultancy Celeres, said that the pace of Brazilian soy sales should increase in December or January when farmers know how their beans are developing.

 

Brazil's soy sales remained static this week with only 14 percent of the upcoming 2009-10 soy crop sold as of Sept. 25. Celeres said that Brazil's old 2008-09 soy crop is 93 percent sold as of Sept. 25, unchanged from the week before.

 

Sales will really jump at the height of the harvest in March onwards, he said.

 

Brazilian soy farmers are currently in the inter-harvest period. Farmers are starting to plant their seeds in places such as Mato Grosso.

 

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