November 24, 2003

 

 

Brazil Soy Market Slow As Season Nears End, Weak Prices

 

Brazil's soy market was quiet over the past week on low prices and poor demand as some mills began ceasing operations for the interharvest maintenance period, traders said.

 

"Things are slower than usual for this time of year. The really bad months are December and January when most industries close for maintenance," said a Sao Paulo trader.

 

He added that a sharp drop in prices over the past week has kept producers away from the market.

 

"A weaker local currency has given some support but in general business is very slow as prices in Chicago fell," said the trader. Brazil's real was trading at 2.94 to the dollar Friday, compared to around BRL2.84 two weeks ago.

 

Traders said international prices were easing due to trade friction between the U.S. and China, a major soy importer, and also due to uncertainty about biodiesel plans in the U.S.

 

Soybeans at Rondonopolis in southern Mato Grosso state traded Thursday at around BRL44.00/bag, down from BRL46.50/bag a week ago.

 

"There is very little produce available and producers are unwilling to part with it due to the sharp drop in prices," said a Sao Paulo-based trader.

 

According to traders, farmers are more occupied with planting next Season's crop and are keeping a close eye on weather conditions. "Planting has been going well so far, but this could change very quickly if we got a prolonged dry period," said Jacqueline Alves, trader at the Multisafra brokerage in the Mato Grosso state capital of Cuiaba.

 

Farmers had planted 68% of the potentially record 2003-04 (October- September) soy crop up to Nov. 21, slightly higher than the 66% sown at the same point last year, according to local Safras e Mercado agricultural consultants.

 

In Mato Grosso, the No. 1 producing state, planting was more advanced at 76% up to Nov. 1, compared to 72% at the same time last year.

 

At Paranagua port, soybeans were trading at around BRL48.00 per 60- kilogram bag, compared with BRL49.50/bag a week ago, while in Ponta Grossa, northern Parana, soybeans stood at BRL47.50-BRL48.50/bag, compared to BRL50.00-BRL51.00/bag the week before.

 

Paranagua soybean premiums for the new crop narrowed slightly this week. March shipment was quoted at between 10 and 15 over the equivalent Chicago Board of Trade futures contracts, compared with 18 and 25 cents last week.

 

Soymeal export discounts were wider at $11-$15 per short ton under the CBOT for December delivery, compared with $10-$11 registered at the same time last week.

 

Soyoil export premiums were sharply lower, at 20 to 40 stood at per pound under CBOT Dec contracts for December delivery, compared with 80 to 100 points over, last week.

 

Brazil is expected to produce a bumper crop of 59.4 million metric tons in 2003-04, up 15% on the year before, according to Safras e Mercado.