Wednesday, March 31, 2010

DJ Brazil Soy Trade Timid On Prices, Upcoming USDA Report

SAO PAULO (Dow Jones)--Brazil's soy trade tapered off Tuesday as international soybean prices and the exchange rate failed to inspire selling.

"Buyers such as crushers or exporters struggled to buy beans as sellers refused to sell on Tuesday," said a chief trader at a major U.S. exporter.

The trader said slightly higher gains on the Chicago Board of Trade were canceled out by the exchange rate between the dollar and the Brazilian real on Tuesday.

Benchmark May soybean futures on CBOT ended 6.5 cents higher at $9.74 a bushel on Tuesday. Meanwhile, the dollar was at 1.79 Brazilian reals on Tuesday compared with BRL1.80 on Monday.

The trader said at Paranagua port, Brazil's main grain port, buyers were offering a premium of 15-16 cents over the CBOT May contract, while sellers wanted 20 cents. Only small volumes of physical soy were sold, he said.

Andre Pessoa, director of consultancy Agroconsult, said soy trade in Mato Grosso state, the top soy producer, has edged forward to 63% of the 2009-10 soy crop sold as of March. Sales in Parana, Brazil's No. 2 soy producing state, were at 19% sold as of March.

Most Brazilian farmers can still break even, but they are kicking themselves for not selling more earlier in the crop season, Pessoa said. Prices and the exchange rate were more favorable in previous months and could be pressured further by Brazil's big crop, which is seen at 68 million tons, he said.

For instance, in March the average profit margin in Parana was BRL500 per hectare, down from BRL650 per hectare in February, BRL688 per hectare in January and BRL732 in December, he said.

David Goncalves, a soy analyst at FC Stone in Campinas, said most eyes are on the U.S. Department of Agriculture's planting-intentions and quarterly grain stocks reports, scheduled to be released Wednesday.

Steve Cachia, an analyst at Cerealpar in Parana, said prices were around BRL38.30 and BRL38.40 per 60-kilogram bag on Tuesday at Paranagua.

Many sellers are speculating the USDA report might lead to a small increase in prices, he said.

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


- By Tony Danby, Dow Jones Newswires; 55-11-2847-4523;
Anthony.Danby@dowjones.com

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