January 21, 2009

Falling prices in the US put a damper on Brazilian physical soy trade Tuesday (January 20), traders and analysts said.

 

Soy prices fell 34 cents at US$9.86 per bushel on the Chicago Board of Trade on Tuesday, while the US dollar remained solid at 2.37 Brazilian reals but below last week's highs of BRL2.40.

 

Steve Cachia, a grains analyst at brokerage firm Cerealpar, said that spot soy bean prices on Tuesday were at BRL53 per 60-kilogramme bag, similar to last week, in Paranagua, the main grain port. However, this didn't encourage much physical soy trade, because the farmers who wanted to sell had already done so. The dollar helped to support soy prices in the local market, but it didn't encourage farmers to sell, Cachia said.

 

Cachia added that concerns over the weather in the south also didn't impact soy prices, because most of the drought worries have subsided.

 

Parana state, the No.2 soy producer, and Rio Grande do Sul state, the No.3 soy producer, have received good volumes of rain in recent days after a prolonged dry-spell since mid-November, local news service Somar said.

 

Cachia warned, however, that concerns remain about the dry weather in Argentina.

 

Cerealpar said that soy premiums had buyers offering 40 cents over the March soybean futures contract on the CBOT for February shipment, while sellers were asking for 55 cents over the same contract on Tuesday.

 

"Last week Brazilian farmers were willing to sell when the dollar, internal and CBOT prices moved upwards, but this week farmers are unwilling to let go of their physical beans," a chief trader at a major US soy exporter said.

 

Although soy farmers can make a profit everywhere in Brazil at current prices, they've become used to higher prices and don't want to sell, he said.

 

Leonardo Menezes, an analyst at Brazilian agricultural consultancy Celeres, agreed that Brazil's physical soy trade slowed this week compared to last week.

 

He said that 26 percent of Brazil's new 2008-09 soy were sold by January 16, from 23 percent a week earlier but below the five-year average of 41 percent.

 

Farmers saw better prices last week and decided to sell some of their beans before the supply increases closer to the harvest, he said. Some farmers are already starting to harvest their first beans in Mato Grosso, but most farmers will start harvesting beans in March.

 

Brazil is the world's second largest soy producer after the US.