CEPEA: Brazilian soybean prices in state of Paraná down 4.6% year-over-year to 46.81 reais/60-kilo bag in 2011; exports up 8.4% to 31.5 million tons during January-November period

PIRACICABA, Brazil , January 4, 2012 (press release) – 2011 was marked by uncertainties in the field and in both political and economic scenarios, which directly affect the soy market. In the field, initially, the delay in planting activities of the 2010/11 season in Brazil and in Argentina raised concerns about yield. Later on, agents focused on the impacts of weather conditions on the season in the United States. Political and economic instabilities in the Middle East and in the north of Africa in the first semester and in the euro zone in the second semester of 2011 brought concerns to the sector.

In the first months of 2011, agents focused on the development of crops in Brazil and in Argentina. However, as the months went by, Conab (National Company for Food Supply) released record data for the area, yield and production in Brazil. In Argentina, on the other hand, the production dropped compared to year before.

The planted area with soybean in Brazil was 24.18 million hectares in the 2010/11 season, 3% more in relation to the crop before, according to Conab. The forecast yield was 3,115 (three thousand, a hundred and fifteen) kilos per hectare, 6.4% above, and the yield reached 75.32 million tons, for an increase of 9.7%.

As for shipments, between January and November 2011, Brazil exported 31.5 million tons of soybean, upping 8.4% compared to the accumulated of the same period of 2010, and the highest exported volume (Secex – Foreign Trade Secretariat). Considering soy meal, 13.37 million tons were exported in the first eleven months of 2011, moving up 4.71% in relation to the same period of 2010. Soy oil shipments amounted 1.5 million tons from January to November 2011, an increase of 4.12% compared to that in the partial of 2010.

In the first quarter of 2011 (harvesting period), soy quotes decreased, influenced by road transport problems to the Paranaguá port (Paraná state). Consequently, agents were concerned with the available room in warehouses in some regions and with the high transport costs to the port.

Overall, the soy market in 2011 went through several moments of uncertainties regarding prices trend. Agents were faced with difficulties to estimate the size of the new crop and concerned with the world economy.

In September, quotes of soybean and byproducts started to reflect world economic instabilities more expressively. Consequently, futures quotes in Brazil and at CME/CBOT (Chicago Board of Trade) oscillated sharply, which has influenced values in the Brazilian market. Therefore, prices in Brazil (Indexes), in dollar, hit the lowest levels of the year. On the other hand, in real, the monthly average in September was one of the highest of 2011.

In late 2011, according to agents surveyed by Cepea, only 5% of the soybean from the 2010/11 season was left to be traded. However, the gap between asking and bidding prices continued wide, limiting trades.

The ESALQ/BM&FBovespa Index for the product delivered at the Paranaguá port moved down only 0.8% during 2011, and closed at 49.50 reais or 26.41 dollars per 60-kilo bag on Dec. 28. In the same period, the CEPEA/ESALQ Index for soy (Paraná state – reference for trades in Brazil) dropped 4.6% and closed at 46.81 reais or 24.98 dollars per 60-kilo bag.

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