Brazil soy premiums jump on renewed demand, logistic hurdles

Sao Paulo

PRICE premiums over Chicago futures for soybean shipments from Brazilian ports jumped in recent days on renewed demand, likely from Chinese buyers, and logistic hurdles in Brazil that have reduced grain availability at the ports.

According to local brokers and analysts, there has been unexpectedly high demand for Brazilian beans in a period when most of the crop has been already sold, possibly due to the trade spat between the US and China.

Brazilian producers and grain merchants are also pushing for higher values for soy and corn due to a possible rise in transportation costs from the top grain belt in center-west Brazil to ports in the south, as a result of new legislation that increased truck freight prices.

"Whoever still has soy in Brazil is not willing to sell cheap, so premiums over Chicago have to rise to attract seller interest," said Steve Cachia, a broker at Cerealpar in Curitiba, near Brazil's No 2 grains port Paranaguá.

Soy premiums in Paranaguá jumped from 84 cents over CBOT futures on Monday to 120 US cents over on Friday. Carlos Cogo, a grains analyst in Brazil's Rio Grande do Sul state, said Paranaguá premiums for August shipment went up to US$1.30 over CBOT, and for the September shipment up to US$1.40 over.

Lucas Brunetti, a grains analyst working with São Paulo-based Consultoria Austral, said higher premiums are also a result of falling Chicago futures and the problems with grain transportation in Brazil.

New federal legislation in Brazil, which has been questioned in courts, implemented minimum prices for truck freight that were much higher than previous market values. REUTERS