December 10, 2004
Brazil's Soy Market Slow Despite Recovering Real
Soy farmers in Brazil were mostly unmoved by stabilization in international soybean prices and a weakening of the Brazilian real this week, traders said.
Local business was strongest in the main soybean state of Mato Grosso, where farmers continue to sell their old crop beans to raise capital for the coming crop.
"It would appear that the farmers are saving all the action for 2005," said one Sao Paulo-based trader.
Brazilian producers have sold just 15% of their new crop, compared with 48% at the same point last year.
Central bank intervention triggered a progressive weakening of the Brazilian real this week, which slipped to 2.78 to the dollar from 2.70 last week.
A 60-kilogram bag of soybeans at the Paranagua port stood at 34.00 to 35.00 Brazilian reals Friday, compared with BRL34.00 to BRL34.50 last week.
In Ponta Grosso, northern Parana, soybeans were quoted at BRL32.50 to BRL33.50, slightly weaker than one week before.
In Rondopolis, southern Mato Grosso, prices stood at BRL29.00 to BRL29.50 per bag from BRL28.00 to BRL29.50 last week.
Demand is coming exclusively from soy crushers as exports of Brazilian beans and meal are much more expensive than from the US.
Export discounts held steady despite the continuing rally in soy futures on the Chicago Board of Trade.
At Paranagua port, soybean premiums stood at 50-60 cents per bushel below CBOT Jan futures for December delivery, from 70-100 cents last week.
Soy pellets were quoted at even to $3 per short ton under CBOT quotes for December delivery, compared with even to $2 under last week.
Rainfall continues to fall over the majority of Brazil's central and southern regions, aiding the development of the soybean crop, according to the local Somar Meterologia weather service.
However, drier than usual weather continues to plague the west of Goias state, Brazil's No.4 producer.
However, heavy showers are forecast for the region over the next week.
