October 21, 2009
Brazilian soy trade is limited, ignores currency fall
Trading in soy was limited as growers are between harvest seasons, and prices in Chicago tumbled.
"Nobody wants to sell now," said Steve Cachia, an analyst at Cerealpar in the southern Brazilian state of Parana. "I think US$10 a bushel is a barrier, nobody wants to sell under that level," he said.
On the Chicago Board of Trade, November soy fell 13 3/4 cents to US$9.82 1/2 a bushel, and January soy dropped 15 1/4 cents to US$9.85 1/4 Tuesday (October 20).
Cachia estimates that 93 percent of Brazil's old crop is sold, compared with a figure of approximately 90 percent one year ago. "Those who have some beans would rather just wait a bit longer," he said. Brazil harvests its soy crop between February and May.
Planting of the 2009-10 Brazilian crop is intensifying and reached 12 percent of the total area last Friday, consultants Celeres said in a report. This compares with an average of 5 percent for this time of the year, based on the last five years, Celeres said.
"Brazilian farmers are seeding their soy crop earlier and earlier in order to be able to plant the corn crop as soon as possible," said Cachia.
"The Brazilian market is regionalized and disconnected from Chicago" at this time of the year as exports have stopped, said Flavio de Franca Jr., senior soy analyst at Safras & Mercado in Curitiba.
Though most domestic soy prices rose this week, variations in quotes occurred across Brazil on Tuesday. Prices in some Brazilian markets were unchanged while others rose, Franca said. In Mato Grosso, Brazil's largest soy-producing state, prices rose by BRL1 for a 60-kilogramme bag to BRL 43.30 (US$24.68) from BRL 42.30 (US$24.11), he said. In Parana state, prices in the domestic market were unchanged at BRL46 a sack.
Brazil's currency, the real, weakened to about BRL 1.74 per US dollar Tuesday from approximately BRL 1.71 per dollar Monday after the finance ministry announced a 2 percent tax on foreign capital put into Brazilian bonds and equities effective Tuesday. The tax does not apply to long-term direct investment.
There was little impact of the weakening real Tuesday, which makes Brazilian exports less expensive on markets outside of the country, because of the time of the year. "The fall of the real against the US dollar would have more impact if it were not in the between-harvest period," said Cachia. "There is little soy to sell."
