November 13, 2006

 

Brazil's soy auction sells 670,000 tonnes

 

 

Brazil's first soy auction for the 2006/07 soy crop sold 67 percent of the 1 million tonnes offered on Friday (Nov 10), Savio Perreira, a soy auction coordinator at the Agriculture Ministry, told Dow Jones Newswires.

 

This is the first time the Brazilian government has held an auction for soybeans prior to the harvest. The first auctions were held in June, but most of the 2005/06 crop had already been committed to buyers.

 

"It was better than we expected. The only reason why we did not sell 100 percent in the north of Mato Grosso, which is the place we are most concerned about, is because there was so much bidding that prices fell and farmers left," Perreira said.

 

The electronic auction is run by the National Commodities Supply Corp (Conab) of the Agriculture Ministry in nine states throughout the centre-west and north.

 

The auctions are part of a 1 billion Brazilian real (US$467 million) soy subsidy programme created in May to facilitate soy sales in regions where farmers were selling below the cost of production.

 

In northern Mato Grosso, 98 percent of the soy offered was sold at prices currently 32 percent greater than the local market price.

 

The soy is to be sold between February and November 2007.

 

On Thursday, Agriculture Minister, Luis Guedes Pinto, said in a press statement that the government intends to offer between 15 million and 20 million tonnes of soybeans in 2006/07 soy crop auctions. For comparison, Brazil exported 22 million tonnes of soybeans between January and September 2006.

 

Brazil is the no. 2 soy producer and exporter behind the US.