November 14, 2007

 

Brazil soy maket sees no upside surprise to planted area

 

Despite the Agriculture Ministry's expectations for just a 2-percent increase in soy plantings, most agribusiness consulting groups, like Agroconsult, still say the 2007-08 soy crop should increase by 6.5 percent to 22 million hectares this week.

 

Brazil is currently planting soy nationwide. Roughly 44 percent of the crop has been planted so far this week, compared to 27 percent last week, according to Celeres, an agribusiness consultancy.

 

However, the number of hectares going to soys has not increased over the weeks, despite higher soy prices on the Chicago Board of Trade.

 

"We are seeing good domestic and international prices, which are driving the market, and also higher sales of items such as fertilizers that indicate farmers are planting more areas compared to last year," said Andre Debastiani, a consultant at Agroconsult.

 

Agroconsult's forecast is more optimistic than the National Commodities Supply Corp., or Conab, which estimates 21.2 million hectares will be planted for the 2007-08.

 

Daniel Sebben, an analyst at local consultancy AgRural, said that in Mato Grosso, Brazil's largest soy producing state, is expected to utilize 5.7 million hectares for the 2007-08 soy crop, up 8 percent from 2006-07 but not any bigger than analysts expected in August and September.

 

After a long period of bad weather, soy crop planting and new plant development is now normal across most of Brazil, said Sebben.

 

On the trade side, soy exports are slowing down to nearly nothing.

 

In Paranagua, Bunge has some 50,000 tonnes of soymeal expected to be shipped to Europe, with no other shipments of soy expected in Paranagua this week, according to Cargonovo Maritime Shipping Agency Ltda.

 

At Santos, Cargill has 18,000 tonnes of soys estimated to sail on Nov. 17 to Europe.

 

While at Rio Grande do Sul, Archer Daniels Midland has 49,200 tonnes of soys bound for Europe which are being loaded, and Bunge has 58,000 tonnes expected to be shipped to China.

 

According to a trader with a major US soy trading company, the market is faster than last year because prices are high. But many producers are sitting tight and still waiting to see how their soy crop develops.

 

Around 30 percent of the crop has been sold as of Nov. 9, according to Celeres.

 

David Brew, a broker at Brasoja in Rio Grande do Sul, said that business has slowed lately.

 

"We did a lot of business this year, and then it stopped in October," Brew said.

 

"Farmers are not too pushed for cash," he said.

 

In other news, problems with China's soy crop, which produced 14 million tonnes rather than the expected 16.5 million tonnes, bodes well for Brazil. China is the No. 2 importer of Brazilian soy behind the EU.

 

"China is impacting the basis price that is growing due to higher demand (from Asia)," the US trader in Sao Paulo said.

 

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