December 22, 2004

 

 

Brazil Soy Market Shows Little Activity Due To Year-End Maintenance

 

Brazil's soy market has been quiet because most crushers are closed for annual maintenance and local produce cannot compete on the export market, traders said Tuesday.

 

The country is the world¡¯s second largest producer and exporter of soybeans.

 

"So far, there are very few deals and all the sales going on now are for delivery in January," said Benedito Oliveira, analyst at the local AgRural agricultural consultancy.

 

Traders expect activity in the market to start in the second week of January, when most crushers resume operations.

 

Early harvested soy will begin hitting the market at that time, which should induce sales increase.

 

According to Brazilian agricultural consultancy Celeres, Brazilian producers will have 2.7 million tons of soy in stock on Dec. 31, equivalent to 5% of the 2003-04 crop compared to less than 1 million tons in previous years.

 

"The high stocks are something new for Brazilian producers and will change the way soy is sold this harvest," said Anderson Galvao, an analyst at Celeres.

 

Traders do not expect prices to increase significantly because many producers are still holding stock from the 2003-04 crop.

 

Likewise, the weakening of the dollar continues to hurt Brazilian producers in the export market. On Monday, the Brazilian real closed at 2.676 to the dollar, its strongest level since June 18, 2002.

 

According to traders, soy prices are only likely to react if there is a problem with the harvest, which appears unlikely.

 

"The weather has been close to ideal. Rain has been falling throughout soy-producing regions and all of the areas that needed rain have received it," said Galvao.

 

Soybean premiums sood at 60 to 70 cents per bushel below Chicago Board of Trade futures for January delivery.

 

Soy pellets were quoted at $1 below to $2 over per short ton under CBOT quotes for January delivery, compared with even to $2 over last week.