November 19, 2008


Brazilian soy trade propelled by stronger dollar - brokers



Brazilian physical soy trade has been propelled recently by a stronger dollar, but generally business remains quiet during the inter-harvest period, brokers and analysts said Tuesday (November, 18).


The likes of ADM (ADM), Bunge (BG) and Cargill were more aggressively buying soybeans last week mainly for their Brazilian crushing operations, said a broker at brokerage firm Cerealpar in Mato Grosso state, Brazil's No. 1 soy-producing state.


Brazil's physical soy trade saw a flurry of activity last week, with the dollar rising to a weekly peak of BRL2.40 on Nov. 13. But, since then, the dollar has decreased in value, and it hit 2.32 Brazilian real on Tuesday.


When the dollar rises against the Brazilian real, this usually helps to stimulate Brazilian producers to sell because they get more for their crop in the local currency.


January soybean futures contracts on Tuesday on the Chicago Board of Trade slipped slightly to US$9.02 per bushel.


"We bought more old-crop (2007-08) soy last week due to the higher dollar, but as the dollar is now lower, business is relatively quiet," said a chief trader at a major U.S. multinational.


Steve Cachia, a soy-market analyst at brokerage firm Cerealpar, said the shortage of soy keeps the brakes on trade. Brazil is in the inter-harvest period.


Cerealpar said that on Tuesday soy premiums at the Paranagua port, Brazil's main port for grain shipments, had buyers offering 95 cents over the December soybean futures contract on CBOT. Sellers were asking for 110 cents over the same contract, with virtually little price agreement.


Elsewhere, news that the U.S. Department of Agriculture said 95 percent of the U.S. soy crop had been harvested had little influence on the Brazilian market, said Cachia. Brazilian soybean traders currently are not concerned about exports, and the focus is on selling locally to make soymeal and soy oil.


The export market is also slow because Brazilian soybeans are not competitive in the interim harvest period, with cheaper beans available from the U.S., brokers said.  


Brazilian 2008-09 Crop


The chief trader at the U.S. multinational said planting is progressing well at about 2 percent per day. He expects about 65 percent of the area to be planted by Friday. Brazilian farmers started planting soy last month.


Leonardo Menezes, an analyst at Brazilian agricultural consultancy Celeres, said 55 percent of the area has been planted so far compared to 60 percent at the same time last year and 54 percent average over a five-year period.


Soy planting was hampered by rain in the south of Brazil and by some credit issues leading to fewer machinery purchases but is within expectations, said Menezes.


Menezes said Celeres is likely to downgrade its estimate for the 2008-09 soy crop compared to 61.7 million tons estimated at the start of November due to credit issues leading to the use of fewer inputs, said Menezes, without giving details. Celeres will issue its next estimate in December.


Brazil should harvest between 58.3 million and 59.3 million metric tonnes of soy in the 2008-09 crop, the National Commodities Supply Corp., or Conab, said last week.


Brazil is the world's No. 2 producer of soybeans after the U.S.

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