September 10, 2008

 

Brazil soy market quiet as producers refuse to sell

  

 

Brazil's soy market continues to be quiet this week as soy producers clutch tightly onto their old and new soy in hope of higher prices, said analysts and brokers Tuesday (September 9).

 

"There is virtually no selling of soy today, with the Chicago Board of Trade still at a low level," said a trader at a major US soy trading company.

 

Although soy futures rose 9 cents to US$12.01 per bushel on Tuesday for the November contract on CBOT, they have plummeted from levels of US$16 per bushel just a few months ago.

 

"We have seen November soy prices fall 85 US cents in the last two weeks alone on CBOT, so nobody wants to sell," he said.

 

Low prices on CBOT also wiped out recent gains made by the US dollar versus the Brazilian real, the trader said. The Brazilian real stood at 1.77 against the dollar on Tuesday from below BRL1.60 in June.

 

Brazilian agribusiness consultancy Celeres reported Brazil's new 2008-09 soy crop, to be planted in October, was 14 percent sold as of September 5 and the old 2007-08 crop, harvested in May, is 91 percent sold.

 

A broker at grain brokerage firm Cerealpar agreed Brazil's soy markets were quiet. "It's a slow day with few producers willing to sell due to low prices," said the broker.

 

Nonetheless, the likes of ADM, Cargill and Australian Wheat Board, or AWB, bought physical soy Tuesday to ship from Paranagua port, the broker said.

 

Soy bids were 60 cents above the November soy contract on CBOT and sellers were asking for between 70 cents above and 80 cents above the same contract on Tuesday, according to several brokers.

 

David Goncalves, a soy consultant at FC Stone, also noted that despite some gains on CBOT Monday and Tuesday, the market had ground to a halt.

 

Goncalves said Brazilian soy producers are eyeing USDA soy data later this week in hope for positive news to lift soy prices.

 

"With CBOT prices between US$11 and US$12 per bushel many farmers, especially in the mid-west region, won't make a profit," said David Brew, a broker at Brasoja in Rio Grande do Sul, the No. 3 soy-producing state.

 

States such as Mato Grosso are the furthest from the main soy ports of Paranagua and Santos, and therefore have the highest transport costs.

 

Brazil harvested 60 million tonnes of soy in the 2007-08 soy crop, the National Commodities Supply Corp., or Conab, said Monday in its final crop estimate for the season. The 2007-08 soy harvest rose almost 3 percent from the previous 2006-07 soy crop, said Conab.

 

Brazil is the No. 2 soy producer behind the US. 
        

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