August 13, 2008

  

Brazil soy trading remains slow despite CBOT gains

 

 

Trading in Brazilian soy remained slow Tuesday (August 12), despite gains on the Chicago Board of Trade.

  

"Brazil's soy market remains quiet on this week due to CBOT prices remaining lower than a few weeks ago," said Steve Cachia, a soy market analyst at grain brokerage firm Cerealpar.

  

Although November soy futures rose 18 cents to $12.14 a bushel on the CBOT Tuesday, Brazilian soy producers continue to hold onto their remaining soy.

  

Cachia said Brazilian producers were betting on Tuesday's US Department of Agriculture's crop production outlook coming in below expectations.

  

Although the USDA numbers were bullish for soy and CBOT prices rose, there was no real impact for Brazilian farmers, Cachia said.

  

The USDA's lower-than-expected crop production estimate, based on the first field surveys of US crops, pegged 2008-09 US soy production at 2.973 billion bushels, down from the July estimate of 3.000 billion.

  

A trader at a major US soy trading company agreed that the USDA soy crop data did little to lift Brazil's soy market on Tuesday.

  

"There's still no (Brazilian) soy business, even though the (CBOT) is up 18 cents," he said, noting that CBOT prices are still below July levels.

  

According to the trader, Brazil's soy producers are still "in hiding," waiting for better prices.

  

Moreover, Brazilian soy isn't competitive for export, he said.

  

Buyers at Paranagua were offering 50 cents over the September CBOT contract, while sellers wanted 70 cents over on Tuesday. Buyers were also offering 55 cents over the October CBOT contract, with sellers seeking 75 cents over, according to Cerealpar.

  

The trader expects to see international buyers purchasing the new US soy from September onwards. The remaining Brazilian 2007-08 soy will be up for grabs by Brazilian crushers in the next two months, he said.

  

Mauricio Cardoso, a commodities desk operator at Flow Corretora, said that the USDA numbers helped Brazilian soy trade a little, but led to small volumes. Factors such as the weak US dollar against the Brazilian real and a positive weather outlook kept soy prices low, he said. The Brazilian real was trading around BRL1.62 against the dollar Tuesday.

  

Flavio Franca, an analyst at agribusiness consultancy Safras & Mercado, said that with 87 percent of the 2007-08 soy crop already sold, Brazilian farmers can afford to sit tight. "They only sell when they really need to and will wait for better prices," said Franca.

  

The National Commodities Supply Corporation or Conab, said Thursday that Brazil should harvest 60 million tonnes of soy in the 2007-08 crop.

  
Conab said Brazil is expected to harvest 2.9 percent more than the 2006-07 coy crop.

  

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

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