November 7, 2007

 

Brazil 2008/09 soy sales move slowly at 30 percent

 

 

Sales of 2008/09 soy have barely moved from two weeks ago, currently at 30 percent of the estimated 63 million tonnes crop, according to consulting firm, Celeres.

 

Two weeks ago, the figure was 29 percent. Nevertheless, forward sales for new crop soy, which Brazil growers are currently planting nationwide, are two points higher than the five-year average of 28 percent sold starting November.

 

In a report to clients on Monday, Celeres' senior commodity analyst Anderson Galvao Gomes cited the ever-declining dollar as the main culprit for the slowdown these past several days. The dollar is trading at seven-year lows Tuesday, at 1.73 Brazilian reals.

 

Most of the action in Brazil's soy market at this time is for new crop soy, with carry-over stock next to nothing. Around 97 percent of the 2006/07 crop has been sold, according to Celeres.

 

However, Gomes is recommending growers focus on getting rid of their carry-over stock, currently sitting in co-op warehouses, before returning to 2007/08 future sales.

 

Gomes recommended in his report that farmers here lock in future prices for at least 40 to 60 percent of their new crop, on the grounds that a larger than expected US soy crop would likely cut into favourable soy prices.

 

With the dollar trading lower, a drop in Chicago Board of Trade soy futures would reduce margins for Brazil soy growers who are all hoping to use this new crop as a means to pay down debts accumulated over the past two to three crop years.

 

CBOT soy futures closed up Monday to US$10.05 per bushel for November and US$10.31 for March 2008, which is the contract in which Brazilians are paying the most attention.

 

Brazil plants soy in October and begins the harvest in March.

 

Brazil is the No. 2 soy producer and exporter behind the US. Brazil has shipped 20,032,172 million tonnes of soy to world markets from January to September, compared to 21,835,829 tonnes over the same period in 2006, according to Cargonovo Maritime Shipping Agency Ltda in Paranagua.