December 2, 2009

 

Brazilian soy trade patchy this week on cautious selling

 

 

Brazil's soy trade remains patchy this week as farmers hold out for higher prices.

 

January soy futures on the Chicago Board of Trade were 1 cent lower at US$10.59 a bushel Tuesday.

 

Small volumes of soy trade took place this week at ports such as Paranagua and Santos for February, March and April deliveries, Steve Cachia, an analyst at brokerage firm Cerealpar, said. "But, overall, trade is slow," he said.

 

Although soy prices remain at the target price of around 10 US cents per bushel on the CBOT this week, Brazilian farmers remain cautious about selling their beans. "This is largely psychological. When prices are at 9 cents per bushel, farmers want 10 cents; and when CBOT reaches 10 cents, they want 11 cents," Cachia said.

 

William Balbino, a trader at Cerealpar in Mato Grosso, Brazil's No. 1 soy-producing state, agreed that business was patchy.

 

Balbino said that Brazilian producers on Tuesday wanted 60 cents over the March contract on the CBOT for delivery in February. Buyers, however, wanted 50 cents over the same contract, he said.

 

Balbino said Archer Daniels Midland Co. bought around 6,000 tonnes of soy on Tuesday from local producers in Mato Grosso.

 

Brazilian consultancy Celeres said that just 19 percent of the new 2009-10 soy had been sold as of Nov. 27 and 98 percent of the prior 2008-09 crop was sold. The consultancy said that producers were just selling enough soy to cover their costs, Celeres said.

 

Marcelo Bartholomeu, a risk consultant at FCStone, said that Brazil's export trade will only begin to pick up early next year, when the new beans start to flow in January and February from the fields of Mato Grosso.

 

Mato Grosso's farmers finished planting their soy as of Friday. Their first new soy will begin to be harvested in late December and early January, and the harvest will gather pace through March and April.

 

Soy was trading at 41.15 Brazilian reals (US$23.85) per 60-kilogramme bag in Rondonopolis in Mato Grosso on Tuesday, compared with BRL40.50 per bag Monday.

 

Brazil is the world's No. 2 producer of soy after the US.