November 1, 2004

Brazil Soy Producers Reject Local Prices

Brazil's soybean market moved slowly over the last week as farmers largely rejected current prices, which they say don't cover the costs of planting the 2004-05 crop, traders and analysts said.
 
"Farmers who have waited since March to sell are willing to hold on a little longer to see if they can turn a profit," said one Sao Paulo-based trader.
 
A 60-kilogram bag of soybeans at the Paranagua port fell to 35.70-36.20 Brazilian reals ($1=BRL2.85) from BRL36.00 to 38.00 last week.
 
In Ponta Grosso, northern Parana, soybeans were quoted at BRL35.00 to BRL36.00, up from BRL35.50 to BRL36.20 one week before.
 
Furthermore, no upturn in trade was expected Friday as the market winds down ahead of an extended holiday weekend. Local markets will be closed on Tuesday as Brazil celebrates the All Saints Day. Monday is expected to be extremely quiet as well.
 
Business was slightly more active in the top-producing center-west state of Mato Grosso than other regions this week as farmers seek to raise funds to pay for the planting of the 2004-05 crop, which was 12% planted up to last Friday, according to the local agricultural consultants Celeres.
 
Mato Grosso producers are selling not only to raise cash but also to clear space for the arrival of the current crop, the harvesting of which begins in February and hits full pace in March.
 
In Rondopolis, southern Mato Grosso, prices climbed to BRL30.50-BRL31.50 per bag from BRL32.00-BRL33.00 last week.
 
Farmers in the south continue to retain stocks despite the fact they still hold around 30% of last year's crop. In 2002-03, producers had already sold 96% of the crop at this late stage of the season.
 
But Brazil is expected to produce a record crop of 60 million metric tons or more this season and warehouse space is limited. Therefore, farmers must sell a large portion of these stocks before April.
 
"Southern farmers are selling corn, not soy, to pay off bills but the warehouse space issue will force the farmers to sell soon," said one trader, who is based in the southern city of Curitiba.
 
Forward sales of soybeans from the 2004-05 season also remain slow as current prices do not cover farmers' projected costs.
 
Consistent rainfall from Tuesday in Mato Grosso raised soil moisture levels to satisfactory levels for planting. As a result, some 15% of area has been planted compared with 10% last year, traders said.
 
Up to last Friday, Brazilian farmers had planted 10% of their projected 2004-05 crop, on a par with last season, according to the local Celeres agricultural consultancy.
 
Export discounts tightened over the last week in compensation for rising international prices on the Chicago Board of Trade.
 
At Paranagua port, soybean premiums stood at 50-60 cents per bushel above CBOT Nov futures for November delivery, from 60-70 cents last week.
 
Soy pellets were quoted even to $2 to $3 per short ton under CBOT quotes for November delivery, compared with even to $2 above last week.