Brazilian Soybeans Not So Attractive To Foreign Buyers

USAgNet – 05/12/2005 –
International soybean buyers are steering away from Brazil this year due to a strong Brazil currency, farmer stock retention and crop losses, according to bean traders.
Last year producers had to wait in long lines at the Parangua port to deliver their soybeans. This year there are no lines as producers hold onto their stock in hopes of better prices.

Brazilian soybeans are being offered at 20 to 23 cents per bushel over the November soybean futures contract for August delivery.
As a result, one major export firm estimates that only 30% of the country’s soybeans have been sold, compared to 60% last year at this time.
Source: Wisconsin Ag Connection

One Response to Brazilian Soybeans Not So Attractive To Foreign Buyers

  1. Kieran Gartlan May 13, 2005 at 6:20 pm #

    Brazilian farmers lost out on record soy prices last year because they committed to soon. Most had already sold a significant portion of their crop back in November and December (at the end of the planting season) when prices were average. Come harvest time (April and May) prices had nearly doubled. This year they decided to wait until harvest time before selling their beans. Traders were also less inclined to sign forward deals, as some farmers defaulted last season and paid contract fines rather than loose out on big profits. As a result sale commitments for April and May (peak harvest time) delivery were much lower this year and so there were shorter lines at Paranagua port. A sharp drought in Rio Grande do Sul also meant less beans were available for shipping this year, especially in the south of the country. Brazil`s currency is getting stronger and stronger against the dollar and is now at a three-year high (R$2.44/Dlr). As soy prices are fixed in dollars this means farmers are now getting less local currency for their beans than before and are thus less inclined to sell. Sales have been taking place though, as farmers had to pay most of their harvest costs by Apr. 30 and it is estimated that nearly 70 percent of this year`s crop has been committed, roughly the same as last year. The difference is that this year, the commitments came much later and delivery has been spread out more, rather than concentrated in peak harvest months of April and May. Farmers will probably now hold onto remaining stocks hoping for a depreciation in the local currency or news on the US crop, such as drought or Asian rust.