April 10, 2009

Soy export premiums in Brazil have been pushed higher than usual at this time of the year due to farmers' reluctance to sell their products, especially in southern states.

 

Forward sales of soy in Brazil's southernmost state, Rio Grande do Sul, remain patchy despite a recent increase in soy futures and a weaker Brazilian real against the US dollar than a year ago.

 

Only 20 percent of the crop in the state is sold, down from 55 percent last year, said Antonio Sartori, director at Brasoja brokerage.

 

Export differentials in Paranagua port are at around 40-cents above the May contract <SK9> in CBOT. Soy premiums for prompt delivery are usually around 20-cents under the spot price at this time of the year, when recently harvested soy is transported to the ports.

 

But higher-than-usual premiums failed to lure many farmers to sell, as they argue costs were too high during the planting season and are demanding for prices that will compensate for that.

 

Producers in rural parts of the state stayed out of the market despite rising soy prices, said AgraFNP consultancy.

 

Soy futures surged to a two-month peak on Wednesday (Apr 8), exceeding US$10 per bushel in the CBOT.

 

Sartori said farmers believed prices will increase further due to strong demand.

 

Sartori added that sales increased significantly in Parana state on Tuesday (Apr 7) as prices rose in Chicago.

 

Soy sales in Brazil this season has been slower than usual mainly due to the world credit crisis, as trading houses and banks had difficulty raising resources to buy soy forward from producers.

 

Farmers also became reluctant to sell when they saw prices beginning to rise in Chicago earlier this year, in the hope they would get a better deal if they deferred sales.