April 29, 2009

Falling international prices and concerns about swine flu slowed Brazil's soy trade this week, industry participants said Tuesday (April 28).

July soy future contracts closed down 14 cents at US$9.83 a bushel on Tuesday on the Chicago Board of Trade or CBOT. The dollar also ended down at 2.19 Brazilian real.

This week has been very slow after several weeks of solid soy trade and exports due to lower CBOT prices, the unattractive forex as well as concerns about swine flu, said Steve Cachia, a grains analyst at brokerage firm Cerealpar.

Cachia said that buyers Tuesday were looking for around 35 cents over the May soy futures contract on CBOT, while sellers wanted 45 cents over the same contract at Paranagua, the main grain port.

Little business was done despite the attractive premiums - above the negative level expected for this time of year, said Cachia.

Rumours that China might reduce its purchases of soy in the next two week also dampened prices, said Glauco Monte, an analyst at consultancy FC Stone.

Rumours suggested that Chinese importers had backed away from purchases, possibly of four to five cargoes of soy. Crush margins have "collapsed" in China following aggressive buying of soy, a CBOT floor analyst said.

The slowdown is a far cry from the brisk trade during the last two weeks, spurred by prices over US$10 per bushel, said a trader at a major soy exporter.

He said that everybody is waiting to see whether the lower soy prices on CBOT are due to swine flu or a natural level after recent highs.

In the south of Brazil, David Brew, a broker at Brasoja in Rio Grande do Sul, the No. 3 soy-producing state, said that business tailed off this week after good sales in recent weeks as Grande do Sul's harvest came in.

"People have stepped back and are waiting to see what will happen regarding swine flu," he said.

Soy on Tuesday was being sold for BRL49.50 a 60-kilogramme bag at Ponto Grosso in Parana state, the No. 2 soy-producing state.

Leonardo Menezes, an analyst at agricultural consultancy Celeres, said that although prices dipped this week, soy fundamentals remain solid.

Low soy stocks in the US, Chinese demand and uncertainty about the smaller crop in Argentina should help to support prices.

Celeres said that 55 percent of Brazil's new soy crop has been sold as of April 24 versus 52 percent the week before and behind a five-year average of 63 percent.

Farmers in Mato Grosso, Brazil's No.1 soy producer, which has already finished its soy harvest, sold 74 percent of their beans by April 24.

In Parana farmers sold 32 percent of their beans by April 24, while in Rio Grande do Sul 26 percent of the beans have been traded, according to Celeres.

Brazil is the world's No. 2 producer of soy after the US.