Brazil soya sales spurt to China

Brazilian soya exports to China are expected to pick up after a slow start this year as producers cash in on higher Chicago prices and doubts swirl about the new US crop, industry sources said on Monday. Brazilian soyabean exports to China totalled 2.83 million tonnes in the first five months of 2005, nearly 1 million tonnes less than in the same period last year, according to the National Cereals Exporters' Association (Anec).
"Higher prices will prompt Brazilian producers to free stocks," Anec Director General Sergio Mendes told Reuters. He said he believed Brazil would catch up later in the year because Chinese strategy normally involves spreading purchases to avoid over-dependence on one source.
"The main factors behind lower exports were drought in Rio Grande do Soul and reluctance of Brazilian producers to sell because of low prices this year," Mendes added.
Brazil took two years to recover Chinese market share after a severe drought in Rio Grande do Sul in 1999, he noted.
Soyabean production in Rio Grande do Soul, Brazil's No 3 soya grower, fell by more than half to 2.86 million tonnes in 2004/05 (October-September), from last year, due to a long spell of drought this year.
More than 80 percent of the soyabean exports from the port of Rio Grande in 2003/04 went to China. Shipments from Rio Grande enjoy a freight advantage due to lower port handling and transport costs compared with other Brazilian ports.
"Rio Grande do Soul's crop was poor-quality as well as very small and exports to China this year are minimal," said David Brew of Porto Algeria-based brokerage Brasoja.
A sharp rise in benchmark Chicago Board of Trade soyabean futures over the past month due to weather worries about the new US crop and technical fund buying has attracted Brazilian producer selling.
On Monday, CBOT rallied to fresh 11-month highs with new crop November last trading at $7.57 1/2 per bushel.
"Brazilian producer sales are speeding up as Chicago climbs," said Odineia Santos, soya analyst at Safaris e Merced. Analysts pointed out that Brazil's main soya export market is Europe and that China, the world's biggest soya importer, traditionally buys mainly from the United States.
The US provided 47 percent, Brazil 30 percent and Argentina 23 percent of China's soyabean imports in 2004, according to US Department of Agriculture and Anec data.