December 19, 2003

 

Brazil's Soy Market Slows With Christmas Approaching

 

Brazil's soy market has slowed considerably with Christmas approaching with  trade so far restricted to occasional deals at port.

 

"International quotes look like staying firm. Farmers have sold a good portion of the crop and they see no reason to sell," said one trader at a major trading firm in the Mato Grosso state capital of Cuiaba.

 

Business was even quiet in the southern state of Rio Grande do Sul, where

farmers still have a portion of the 2002-03 (October-September) crop to sell.

 

On Thursday, soybeans were quoted at 48.50 to 49.00 Brazilian real ($1 = BRL2.93) per bag at Rio Grande port, down from BRL50 to BRL51 one week before.

 

At the principle export port of Paranagua, soybeans were trading at around BRL48.80 to BRL49.50 per bag, down from BRL48.00 to BRL49.00 per bag last week, while in Ponta Grossa, northern Parana, soybeans stood at BRL47.00- BRL48.00/bag.

 

It looks increasingly likely that Brazilian producers will have a bumper crop next year, said traders.

 

After isolated dryness problems in October and November, Brazil's top- producing center-west region reported excellent rain over the last 20 days, according to Gerson Carvalho of the Multisafra brokerage in Cuiaba.

 

According to one trader, with 50% of the state's crop in the flowering stage, a crop of over 16 million tons is very likely and over 17 million tons a distinct possibility.

 

Last week, the Agriculture Ministry pegged the state's crop at 15.6 million tons.

 

Meanwhile, farmers are confident they can control damage caused by the Asian Rust disease in Mato Grosso with heavy spraying.

 

One weather worry was the heavy rains across the soy-rich northwest region of Rio Grande do Sul this week.

 

Precipitation of up to 300 millimeters caused flooding in certain parts of the region, but coops reported little damage, except in low-lying regions.

 

While heavy rain can cause some disease problems, it is unlikely to cause heavy losses, said Benedito Oliveira, analyst at the Agencia Rural agricultural consultancy.

 

The cold front that brought the deluges has now moved over the southeast of Brazil and should provide more moisture to soil in the center-west states of Mato Grosso and Mato Grosso do Sul in the coming days, said the local Somar Meteorologia weather service.

 

The arrival of a new cold front is expected to bring more rain to the south and center-west regions from Dec. 22 to Dec. 26.

 

Soymeal and soyoil markets were slow this week. Most crushing plants have closed to conduct maintenance work in preparation for the coming crop.

 

Paranagua soybean premiums for the new crop moved little this week. Beans for March/April shipment were quoted at level to six cents per bushel over the equivalent Chicago Board of Trade futures contract, compared with level to four cents over last week.

 

Soymeal export discounts for nearby delivery stood at $12-$14 per short ton under the CBOT for December delivery, unchanged from last week.

 

Soyoil export differentials stood at 70 to 110 points under the CBOT Dec contract for December delivery compared with 80 to 110 points last week.

 

As reported, soybean export registrations for Brazil's upcoming 2004-05 marketing year (February-January) moved forward briskly in the first half of December and began to pull close to levels seen at the same time last year, according to official figures released Thursday.

 

Government figures made available by the Brazilian Association of Vegetable Oil Industries, or Abiove, show registrations of soybean exports for the 2004-05 marketing year totaled 6.254 million metric tons to Dec. 15, down 10.5% from the 6.990 million tons registered at the same stage of the previous year.

 

Brazil President Luiz Inacio Lula da Silva late Monday signed a bill approving the planting and sale of genetically modified soybeans for the 2003- 04 crop (October-September), a presidential spokeswoman said Tuesday.

 

Silva endorsed most of the key points of the bill, approved in November by Congress, allowing farmers to plant genetically modified organism seed held on farms up to Dec. 31 of this year, and sanctioning the sale of GMOs up until Jan. 31 2005. This last deadline can be extended for a further 60 days.