November 11, 2009

 

USDA crop reports and forex prices slowing Brazil's soy trade

 

 

Brazil's soy trading remained in the doldrums Tuesday (Nov 10) following the US crop reports and unfavourable foreign exchange rates that did little to inspire producers to sell, according to industry sources.

 

January soy on the Chicago Board of Trade were 11 cents lower at $9.61 a bushel Tuesday.

 

"This is a typical inter-harvest period, with trade almost at a standstill," said Steve Cachia, a soy analyst at Cerealpar.

 

US Department of Agriculture crop reports issued Tuesday spawned unattractive CBOT prices and combined with unfavourable forex rates kept farmers out of the market, Cachia said. "We haven't seen any trade."

 

The USDA production data at 3.319 billion bushels was above the pre-report average estimate of 3.269 billion and up from the USDA's October estimate of 3.25 billion. The US soy carryout was pegged at 270 million bushels, compared with the October estimate of 230 million bushels.

 

The dollar ended at 1.7160 Brazilian reals Tuesday, compared with BRL1.7002 in the previous session.

 

Cachia said Brazilian producers recently saw prices in CBOT at above the symbolic price of US$10 a bushel. If they didn't sell then, they will probably wait for CBOT to reach these levels again, he said.

 

Cerealpar said that premiums in Paranagua port for soy saw buyers asking for 63 cents over the February soy contract on CBOT, while no sellers appeared. Buyers wanted 55 cents over the March contract on CBOT, while sellers wanted 60 cents over the same contract, according to Cerealpar.

 

A chief trader at a US soy exporter said that trade is "stuck" during the inter-harvest period.

 

He said Brazilian producers face no pressure to sell until either CBOT prices rise to around US$10.50 a bushel or the harvest starts, leading to storage issues.

 

Although beans will begin arriving from the fields in January from Mato Grosso, Brazil's No. 1 soy-producing state, the harvest will only gather pace in February and March. "Then selling will intensify," he said.

 

Brazilian agricultural consultancy Celeres said that 17 percent of the 2009-10 soy has been sold as of November 6, steady with the week before and below a five-year average of 23 percent. Farmers have been making only small amounts of forward sales to cover their planting costs, Celeres said.

 

The consultancy said that 97 percent of the 2008-09 soy has been sold as of November 6, steady with the week before and a five-year average.

 

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