Sales of corn and soyabeans in Brazil are expected to wind down in the coming months as farmers retreat in the face of an appreciating local currency and lower grain prices in Chicago, according to market agents. Brazilian soyabean and corn exports are already expected to plunge in August after strong sales abroad earlier in 2016 due to the then-weaker real that left producers comfortably capitalized.
"New sales should be stalled for a while," said a senior trader at a Sao Paulo-based grains brokerage. "I've already booked my vacation for September." But he noted that China's demand for soya and corn will turn back to Brazil in early 2017, when the new crop begins harvesting, adding: "I think in January, I'll work four times as much as in September."
Farmer sales of the old soyabean crop (2015-16) have advanced two percentage points in July, reaching 85 percent by August 5, Franca Junior consultant said. Forward sales of the 2016-17 soya crop, which starts harvest in January, advanced only three percentage points last month, to around 20 percent of the expected crop volume.
Bids for soyabeans on the spot market in northern Mato Grosso touched 83-84 reais per bag several weeks ago, said Angonese. But bids are currently around 63 reais with very little interest from farmers. Bids for soyabean deliveries in February-March 2017 are around 57-58 reais per bag, down from 68-70 reais in previous months, when most of the new-crop sales occurred.
Brazil's currency, the real, firmed on Wednesday hitting 3.13 reais per dollar for the first time since July 2015. The real's appreciation and the approaching bumper harvest in the United States are weighing on local sales. Chicago Board of Trade soyabean futures dipped below $10 per bushel, almost 20 percent below an early June peak of more than $12. Corn futures are near a 22-month low.
A grain buyer for an Asian merchant in southern Brazil said soyabean importers will shun high Brazilian premiums and turn to cheaper US cargoes in the coming months if the North American harvest projections are confirmed. The situation with corn was similar, he added. After strong first-half exports of soya and corn, brokers said local producers have enough cash on hand to focus on the new planting season that starts in September, selling only hand to mouth when fresh operating cash is needed.