Brazil Soy Trade Lifted By Favorable Forex This Week
March 03 2009 - 3:35PM
Dow Jones News
Brazilian soybean trade has been boosted by favorable forex
conditions this week, industry specialists said Tuesday.
The May soybean futures contract on the Chicago Board of Trade
settled four cents higher at $8.48 a bushel on Tuesday. This
compared to $8.44 at the end of trading on Monday.
"On Tuesday three factors have aligned in the right direction -
good currency, good premiums, and the CBOT also is helping," said a
chief trader at a major U.S. soy exporter.
One U.S. dollar was 2.41 Brazilian reals on Tuesday, which is
far above lows of BRL1.55 last August and levels of around BRL2.30
in late February.
A said that this week the favorable forex conditions have meant
that Brazilian farmers get more local currency for their beans, and
this has helped to offset prices generally decreasing on CBOT.
"All of the major players such as Bunge (BG), Cargill, ADM (ADM)
have been buying soy this week, and I expect between 300,000
(metric) tons and 350,000 tons to be bought on Tuesday," the trader
said.
A broker at a Sao Paulo-based brokerage said soy buyers were
asking Tuesday for 42 cents over the May contract on CBOT, with
sellers wanting between 42 cents and 43.5 cents over the same
contract.
The broker said Brazilian farmers have already sold around 34%
of their new 2008-09 beans compared to a yearly average of more
than 45%.
"The global economic crisis and tight credit is still
outweighing soybean fundamentals," he said.
Brazilian consultancy Celeres said farmers in Mato Grosso, the
No. 1 soy producer, had sold 52% of their soybeans as of Friday
compared to 50% on Feb. 20. Farmers in Parana, the No. 2 soy
producer, had sold 17% of their beans by Friday, steady with the
week before.
Steve Cachia, an analyst at local Brazil-based agricultural
consultancy Cerealpar, said that, overall, February's physical
soybean trade was slower than in January, which had seen higher
prices in the Brazilian market and better forex conditions. Since
the January bright spot, trade has slowed and farmers have been
reluctant to sell.
"If they (farmers) need cash, they tend to sell their corn," he
said.
Farmers don't see corn prices as likely to rise due to high
stocks, while they still hope that some news such as unfavorable
weather will help to push up soy prices, he said.
Cachia said on Tuesday that soybean prices were at BRL47.70 per
60-kilogram bag, which was above last week's range of range of
BRL46 to BRL47.50 per bag.
Cachia said around 22% of Brazil's 2008-09 soybeans have already
been harvested. Cachia puts the new crop at 57 million tons.
Brazil is the No. 2 soy producer behind the U.S.
-By Tony Danby; Dow Jones Newswires; 55-11-2847-4523;
Anthony.Danby@dowjones.com