The Debts of the Lenders: Brazilian Farmers Hoard Soybeans

Exporters Frustrated By Lack Of Brazilian Soy

Brazilian soybean farmers are frustrating exporters by hanging on the last of their soybean crop in hopes of getting better prices, industry sources said Friday.

“We have destinations that would like to receive beans, but we can’t buy volumes at the moment,” a chief trader at a major U.S. soy exporter said.

Brazilian farmers have already sold around 90% of the 2008-09 soy crop, so farmers are holding onto their remaining beans in order to speculate on higher prices. Brazil produced around 57.1 million metric tons of beans in 2008-09 compared with 60 million tons in 2007-08, according to Brazil’s National Commodities Supply Corp. Some states, such as Parana, Brazil’s No. 2 soy producer and Rio Grande do Sul, the No. 3 soy producer, have more stocks because they harvest later. But Mato Grosso, the No. 1 soy producer, and other states in the center-west soy belt have few soybeans left for sale.

Moreover, farmers with soybeans to sell are waiting for prices to rise and aren’t in a rush to sell, said industry sources.

This is normal for the inter-harvest when most exporters tend to turn to the U.S. for their soybeans rather than the southern hemisphere, the trader said.

Trade may increase if farmers need cash to pay for the new planting season, but most farmers are well capitalized, he said.

They may also sell if farmers expect the likely bumper new U.S. soy crop to push down prices, he added.

Brazilian farmers begin to plant in September onwards in parts of Mato Grosso state.

Steve Cachia, a grains analyst at Cerealpar, said smaller Brazilian and Argentina soy crops this season have made the situation tighter than normal.

“Ten percent of beans remain to be traded, but these will run out in the coming weeks or months,” Cachia warned. Cachia said that aggressive buying, however, isn’t occurring at the moment. It seems that exporters and local crushers have good stocks and will try to extend these until beans become available from the U.S., he said. They may have also anticipated the shortages and bought earlier, he said. Soybeans were trading at 48.50 Brazilian reals ($24.46) per 60-kilogram bag on Friday at the port of Paranagua.

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

Source: CME News for Tomorrow