January 13, 2010

 

 

Brazil's soy traders were discouraged by falling international prices and unfavourable forex this week.

 

March soy on the Chicago Board of Trade closed 32.50 cents lower at US$9.78 a bushel on Tuesday (Jan 12). 

 

The USDA said on Tuesday (Jan 12) that US soy production in 2009 will set a record of 3.361 billion bushels, while Brazil's soy was estimated at a robust 65 million tonnes.

 

USDA production forecasts for the US and Brazil were "very bearish," said a chief trader at a major US soy exporter. No sellers are willing to step forward as CBOT prices have been falling this week, the trader added.

 

Steve Cachia, an analyst at consultancy Cerealpar, agreed that Brazil's soy trade has stalled as a result of USDA data and forex moves on Tuesday (Jan 12).

 

Recently, some farmers in Mato Grosso, Brazil's prime soy producing state sold their early beans if they needed cash to cover their expenses, otherwise there was little trade. Mato Grosso is typically the first Brazilian state to harvest.

 

Leonardo Menezes, an analyst at agricultural consultancy Celeres, said that farmers in Mato Grosso had sold 36% of their upcoming 2009-10 soy crop as of January 8, compared to 34% in the previous week. This compares to 23% of the crop sold across Brazil in the same period compared to 22% the week before, Celeres said.

 

Although farmers in recent weeks sold small amounts of beans at prices tipped above US$10 per bushel, most have generally taken a cautious wait-and-see approach especially as the forex took the shine off prices in the local currency.

 

Cachia said that China and other buyers are expected to start buying more beans as the Brazilian harvest gathers pace in February and March.

 

Cachia added that concerns of policy changes in China to hike interest rates to tame the nation's torrid economic growth should not hamper the soy trade. Demand for Brazilian soy from China should remain strong in 2010, he said.