October 25, 2006

 

Brazil's soy farmers locking in prices

 

 

Brazil soy growers continue taking advantage of favourable soybean prices on the Chicago Board of Trade this week and will likely continue to lock in prices so long as CBOT soybeans stay over US$6 per bushel, brokers said Tuesday (Oct 24).

 

January CBOT soybeans were US$6.29 per bushel in late Tuesday morning trading.

 

Brazil's soy market has been more active ever since soy prices broke that US$6-per-bushel barrier. Brazil's soy prices continue to be attractive for two reasons --low supply and high demand for soymeal and soyoil as the holidays approach.

 

Brazilian growers are currently planting the 2006/07 soy crop. An estimated 19 percent of that crop has been planted as of Oct 20, according to agribusiness consultancy AgRural.

 

Nevertheless, despite the favourable pricing, Brazil's soy volume has been sporadic this week when compared to the previous two weeks, said buyers at Coinbra and Coimex.

 

"The physical market has very little product left to offer so the business being done is in future sales," said Emilio Ramos, a consultant for AgRural.

 

The government held a soy auction on Tuesday, selling more than 96,000 tonnes, or 24 percent of the offering. Light volume is due to low product availability. Volume is expected to increase in early 2007.

 

Farmers also appear willing to wait for further details on yet another soy-subsidy mechanism the government is expected to announce next week, said Paulo Gilioli, a broker at Cerealpar in Mato Grosso.

 

The lack of physical supply has made soy like gold again in Paranagua port, selling for over 33 Brazilian reals (US$15.42) per 60-kilogramme bag, compared to prices closer to US$9.70 per bag in northern Mato Grosso on Tuesday, according to brokerage firms Alianca Corretora and Ativa Corretora.

 

Premiums are relatively stable this week, at 17 cents over the May soybean CBOT contract and 19 cents over the July CBOT soy contract, Alianca reported Monday. Buyer premiums have not changed in two days, but sellers have been willing to come down.

 

Brazil is the world's no. 2 soy producer.