December 19, 2007

Brazil soy trade slow as farmers hold out for higher prices

Brazil's soy market is slow again this week, as farmers continue to speculate that soy prices can go even higher, traders and analysts said on Tuesday (December 18, 2007).

"Business remains at a standstill, with farmers waiting for even better prices," Steve Cachia, an analyst at Cerealpar, said.

Although prices for the new 2007-08 crop move above US$11 per bushel on the Chicago Board of Trade for the March contract, Brazil soy growers are optimistic and prefer to hold onto around two-thirds of their crop on average.

"Even though prices are the best for over 30 years, we are not seeing any special business," said Cachia, noting that only a small volume of business was done this week.

Farmers in Brazil's main center-west soy belt have already sold nearly two-thirds of their crop, compared with a national average around 35 percent sold, and are comfortable with their strategy, Cachia said. While in the south of Brazil, which harvests later than the rest of the country and has pre-sold less soy, business is also "slower than expected," said Cachia.

Stefano Passinato, an analyst at agribusiness consultancy AgRural, agreed that the market is "restrained." "Farmers have sold enough to cover their costs of production and are now waiting for next year," said Passinato.

A trader with a major US soy trading company agreed that there was virtually no business for 2007-08 soy this week.

"The market is totally dead; there are no sellers, no bids and everyone is in the Christmas mood already," he said.