South America Calling

Brazil Soy Market Slow as Harvest Gets Under Way

Brazil's soybean market has been slow over the past month with farmers opting to wait for higher prices in the post-harvest period.

As a result, farmers had committed 31% of their 2014-15 crop as of Dec. 31, representing a rise of just five percentage points on the month before and leaving the commitments well behind the 43% registered at the same point last year, according to AgRural, a local farm consultancy.

A surge in soybean prices since October, driven by a recovery in soybean futures and a devaluation of the Brazilian real, has left farmers expecting more.

One Brazilian real has slipped in value from $0.447 on Sep. 8, 2014, to $0.373 on Jan. 8, 2014.

But the poor state of Brazil's economy, government finances and weak commodity prices, combined with a strengthening dollar, has prompted some analysts to predict an even greater devaluation. That did not happen in December, with the real instead stabilizing, but farmers are holding out for another drop.

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Meanwhile, farmers hope soybeans can break resistance around $10.60 per bushel for the nearby contract.

Delays in the 2014-15 crop have also slowed sales. With the crop an average of 15 to 20 days late in the center-west and parts of Parana, the true likely size of each farmer's crop is becoming apparent later this year.

Meanwhile, farmers are well capitalized and have no need to sell large portions of crop ahead of time to finance second-crop corn planting, for example.

In the center-west, crops were 38% sold as of Dec. 31, says AgRural, some six percentage points forward on the month but well down on the 51% sold at the same point the year before. With the price of soybeans down at R$54 per 60-kilogram bag ($9.26 per bushel) from R$57 a month ago, farmers are waiting for a better reason to sell. For many Mato Grosso farmers, the price of R$60 per bag is emblematic.

In the south, crops were 17% sold, up three points from the month before but down on 27% the year before. At Paranagua port, soybeans were quoted at R$66.50 per bag Friday (cif), up from R$63 a month before.

Over the next month, farmers will start turning their attention to harvesting.

Soybean harvesting was 1.9% complete in Mato Grosso, the No. 1 producing state, as of Thursday, according to the state's agricultural economy institute, which predicts that figure will rise to 3% by next week.

These are soybeans that were planted before a dry spell in October. The majority of soybeans will only start hitting trading firm silos in mid-February because of the delays.

Despite the dry weather in October, early-planted crops are reporting promising yields, according to IMEA.

(ES)

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