October 15, 2008
Brazil soy trade slow this week as CBOT, dollar fall
Lower soy prices at the Chicago Board of Trade and pressure on the dollar are putting a lid on Brazilian soy trade, brokers and traders said Tuesday (October 14).
"CBOT and the dollar are both down from Monday so trade is quiet and prices still haven't recovered from the falls last week," said a chief trader from a US trading company.
CBOT November soy ended 32 cents lower on Tuesday at US$8.96 a bushel, the lowest level on continuation charts since August 2007. Those prices were a far cry from the heady prices of US$14 per bushel a few months ago.
Soy prices still haven't recovered their value after the 70-cent fall on Friday to US$9.10 per bushel.
The US dollar also fell, to 2.10 Brazilian reals on Tuesday from Monday's BRL2.14 and Friday's BRL2.32. The stronger dollar usually encourages Brazilian soy exporters to sell their beans because they get paid in US dollars.
A broker at a Sao Paulo-based brokerage said that only small volumes of soy were traded this week.
He traded 3,000 tonnes of soy from ADM to local crusher Caramaru for 75 cents over the November soybean contact on CBOT. Cargill also sold 2,000 tonnes of soy to Caramaru for 76 cents over the CBOT November contract.
Steve Cachia, a senior commodities analyst at Cerealpar, also said trade is quiet.
"The CBOT and dollar are down, so most people are out of the market, waiting to see what will happen," he said.
Soy prices for the export market in Brazil fell to between BRL45 and BRL46 per 60-kilogram bag Tuesday out of the Paranagua Port, the main port for grain exports, for between BRL50 and BRL51 per 60-kilogram bag last week.
Cerealpar said buyers asked for 70 cents over the CBOT November soy contract and sellers wanted 80 cents over the same contract on Tuesday, with few deals being done.
Paulo Gilioli, a trader at Cerealpar in Mato Grosso state, Brazil's No. 1 soy producer, said that major multinational companies such as ADM, Bunge and Cargill purchased small amounts of soy at around BRL35 and BRL36 per 60-kilogram bag. However, he said that business was slow, due to the weaker dollar.
Glauco Monte, an analyst at FC Stone, said most producers aren't interested in selling their soy this week, while buyers are just buying enough to cover short-term needs.
Monte said that most of the interest is from Brazilian soy crushers, and that business won't increase until after the inter-harvest period.
Brazilian farmers recently started to plant soy this month. The harvest will start early next year.
Another broker said that the new 2008-09 soy is viewed as too expensive and most international buyers have opted to purchase new soy from the US.
In the Brazilian soy futures market, traders did little business this week.
"Buyers are taking a wait-and-see approach, hoping for better prices," Monte said.
Brazil is the No. 2 soy producer behind the US.
