November 1, 2006

Brazil's soy market quiet as CBOT falls; traders await auction

Brazil soy farmers retreated from the market somewhat on Tuesday (Oct 31) as soybean prices on the Chicago Board of Trade fell, brokers said.

Overall, very little soy is left in the market from the 2005/06 season. Some business is being done within that old- crop market, but new-crop sales have stalled after a good bull run these past two weeks in Chicago.

CBOT May soybeans were trading at US$6.62 per bushel Tuesday, still very favourable prices for Brazilian growers.

"Farmers are waiting to see what happens to these prices," said Helio Sirimarco, a consultant at brokerage firm Ativa Corretora in Rio de Janeiro.

Very little volume is being sold from the 2005/06 crop this week. At the Paranagua Port in Parana state on Monday, for instance, just 300 tonnes of soybeans were negotiated, according to Sirimarco, with 1,000 tonnes in Rio Grande do Sul.

Parana and Rio Grande do Sul are the no. 2 and no. 3 soy producers, respectively.

In Mato Grosso, the leading producer, farmers are waiting for the government auction of new soy from the 2006/07 crop, which will reportedly be held on Nov 10. The government has reserved 1 billion Brazilian reals (US$467 million) for direct and indirect subsidy payments to soy growers.

"There is definitely interest on the part of buyers, but the producers in the centre-west are waiting for the auctions," said Diogo Santos, a broker at Cerealpar, a brokerage firm in Parana.