November 25, 2013
Brazil''s soy prices increase on high demand for US product
Due to the firm international demand, mainly for the product from the US as it increases futures prices, soy and by-products quotes have been registering increases in almost all regions in Brazil surveyed by the Comprehensive Economic Partnership for East Asia (Cepea).
This scenario, the dollar valuation against real (Brazilian currency) and new free on board (FOB) trades to export immediately push up domestic quotes.
Considering Brazilian shipments until April 2014, export premiums are positive. FOB quotes are roughly US$30 per 60-kilogramme bag, level that has not been observed since the first fortnight of September this year.
International prices, in turn, soared in the second week of November, affected by the firm demand for the product from the US and data released by the USDA on November 8, indicating an increase of the production in the US lower than agents expected.
In the Brazilian market, producers are advancing planting activities and are optimistic, expecting a record crop. Trades continued to move at a slow pace, given that the remaining volume of soyavailable to trade was small in mid-November. Prices increase day after day, however, only small batches were traded in the spot market. In regard of soymeal, the volume available was low in the period and players were buying small batches more frequently.
Trades at the Paranaguá port have been involving only small batches to fulfil ships. The ESALQ/BM&FBovespa Index for the soy delivered at the Paranaguá port rose 3% from October 31 to November 18, and closed at BRL77.25 (US$34.06) per 60-kilogramme bag on November 18. In the same period, the CEPEA/ESALQ Index for soy (Paraná state – reference for trades in Brazil) closed almost stable (+0.04%), at BRL73.32 (US$32.33) per 60-kilogramme bag.
In early November, weather conditions in Brazil remained favourable for planting activities of the 2013-14 crop. In spite of reports of caterpillar attacks in some regions, players were still optimistic, waiting for a good production and firm prices.
In general terms, players were most concerned with Helicoverpa armigera caterpillar''s attack. The government is searching for alternatives to avoid producers'' losses, since there is no registered product in Brazil that combats efficiently this plague.