Brazil soy prices rise on CBOT, lower domestic supply

 

 

Brazilian domestic soy prices rose in recent days, benefiting from a rise in Chicago prices and fewer beans available for sale.

 

"There is not much soy for sale in Brazil before April," said one trader for an international crusher in Brazil.

 

Premiums over CBOT soy futures rose because there is a delay in the flow of beans from Mato Grosso, Brazil's largest soy-producer state, the trader said.

 

Chicago has helped the domestic market in Brazil for soy, said Steve Cachia, an analyst at brokerage Cerealpar. "Growers are selling slowly, hoping for better prices."

 

Soy sold for BRL34 (US$18.6) for a 60-kg bag Tuesday (Feb 23) in Cascavel in western Parana state in southern Brazil, said Flavio Roberto de Franca Jr., an economist and analyst at consultants Safras & Mercado. This compares with BRL32 (US$17.52) a bag on February 11, a day before Brazil's annual carnival holiday began, he said.

 

Safras & Mercado raised its estimate of the current 2009-10 crop by two million tonnes to 67 million tonnes, Franca said. He pegs the final estimate for the year-earlier crop at 58.2 million tonnes.

 

The estimate, made last Friday (Feb 19), was raised by 3.1% as "there was good weather in all producing regions, raising productivity," Franca said. The area planted rose to 23.2 million hectares from the prior estimate of 22 million hectares, he said. Franca estimates that 18% of the current Brazilian soy crop has been harvested as of February 19. This compares with 18% a year ago and an average number of 9% for the last five years.

 

Though Chicago prices rose prior to the retreat near market closing on Tuesday, the medium to long-term outlook is for soy prices to drop, said Rafael Ribeiro de Lima Filho, a consultant at Scot Consultoria near Barretos in Sao Paulo state. A lack of infrastructure such as silos for storage can force Brazilian bean growers to sell earlier than they may prefer, he said.

 

The traders and analysts expect Brazilian soy exports to fall this year though the crop size is larger than a year ago. Brazil will have the "largest harvest in history this year," said Lima Filho. Exports, however, will be reduced by the return of Argentina to the market this year, he said.

 

A Sao Paulo trader for a crusher, who asked not to be identified, estimates that Brazilian soy exports from the current crop year will reach approximately 27 million tonnes compared with a year ago. China is buying more soy from the US and less from Brazil, said Franca.

 

Cachia expects Brazil to export a smaller volume of soy because of the return of Argentina to world markets this year compared with the year-ago crop reduced by drought. Argentina's 2009-10 soy production will total a record 52.5 million tonnes, the Rosario Grain Exchange said Tuesday. Brazil's 2009-2010 soy crop is harvested between late January and mid-May.