South America Calling
Alastair Stewart South America Correspondent

Thursday 10/25/12

Brazilian Soy Market at Standstill

With farmers concentrating on planting, Brazil's soybean market remains dead despite a recovery in futures prices in Chicago during the last week.

The reasons for the lack of business are numerous.

Firstly, there simply isn't any old-crop soybeans left following a heavy drought in the south and aggressive export purchases in the first half of the year. According to Celeres, a local farm consultancy, some 99% of the 2011-12 has been sold, up from 94% last year and a six-year average of 86%. The lack of available beans will be reflected in extremely low carryover stocks, which Safras e Mercado, another consultancy, see falling from 2.9 million metric tons in 2011-12 to 343,000 mt in 2012-13.

Secondly, farmers have also sold an unprecedented 47% of their forecast 2012-13 crop, up from 31% last year, as they sought to take advantage of price peaks during the first seven months of the year. In the center-West, where forward sales are more prevalent, some 64% of the crop has been committed, up from 38% last year. With only 15% of the crop planted and rain still irregular in the center-West, farmers don't feel comfortable committing to sell any more produce.

Thirdly, local prices remain lower than a month before, despite Chicago's recent upturn. On Wednesday, soybeans were quoted at R$75.00 per 60 kilogram bag in Ponta Grossa, northern Parana, up 2.7% on the week but down 9.6% on the month. In Rondonopolis, southern Mato Grosso, beans were quoted at R$70.00 per bag, down 1.4% on the week and 6.7% on the month.

The decline in global prices since September prices also halted business for the 2013-14 season that was had previously gained steam in the center-West.

Good news for business was that rain has returned to dry parts of Mato Grosso and Goias with 1 to 2 inches reported in previously dry areas during the last 36 hours.

Planting in Goias and southern and western Mato Grosso is well behind schedule due to lack of rain and farmers were becoming concerned about crop prospects. As such, the showers will come as a great relief, although more precipitation is needed.

Alastair Stewart can be reached at alastair.stewart@telventdtn.com

(ES)

Posted at 9:34AM CDT 10/25/12 by Alastair Stewart
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