CBOT price rise fails to trigger Brazilian soy sales

 

 

Sharply higher futures prices on the Chicago Board of Trade failed to stimulate soy sales in Brazil on Tuesday (Oct 6), according to industry participants.

 

CBOT November soy finished 25 cents higher, at US$9.10 per bushel on Tuesday, on speculative buying and short covering inspired by bullish outside market influences and US weather concerns.

 

The US dollar and Brazilian real exchange rate remains unattractive, industry participants said. One dollar is at 1.75 Brazilian real on Tuesday, compared to BRL1.79 a week ago.

 

"Even with better international prices on Tuesday, trade for old and new soy is at a standstill," Steve Cachia, a grains analyst at consultancy Cerealpar in Parana, said.

 

Cachia said that prices in Paranagua, Brazil's main grain port, were around BRL44-BRL44.50 per 60-kilogramme bag on Tuesday, compared to over BRL50 per bag 4-5 weeks ago. Prices on Monday (Oct 5) were near BRL43-BRL44 per bags in Paranagua, but the increase wasn't enough to encourage selling, he said.

 

Cachia said that buyers Tuesday wanted to pay premiums of around 60 cents over the March 2010 soy contract on CBOT. Sellers, however, wanted 70 cents over the same contract with little trade being done.

 

He said that even Brazil's National Commodities Supply Corp's new soy crop estimate on Wednesday and the USDA crop production data on Friday are unlikely to trigger selling by Brazilian farmers.

 

"They are playing the waiting game and will speculate on higher prices," he said. "They don't need to sell."

 

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

 

A chief trader at a major US soy trading company said Tuesday's increases in soy prices on CBOT failed to inspire trade.

 

Brazilian farmers aren't willing to sell at current prices and are looking for at least US$10.50 per bushel to make a profit, the trader said.

 

"We are struggling to fill a hold of around 8,000-9,000 tonnes in our final vessel of the season 2008-09 crop," he said.

 

Brazilian agricultural consultancy Celeres said producers had sold 14 percent of their new 2009-10 soy crop as of October 2, Celeres said. Celeres said sales figures as of October 2 were below the five-year average of 18 percent and 19 percent at the same time a year ago.

 

Celeres also said that Brazil's old 2008-09 soy crop is 93 percent sold as of October 2, unchanged from the week before. This is the below the five-year average of 96 percent, Celeres said.

 

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