Brazil's soyabean sales slowed this week compared to the previous seven days as premiums at local ports retreated after reaching record levels amid the escalation of a trade conflict between China and the United States, analysts told Reuters on Wednesday. While premiums remain high in historical terms, and Brazil's currency has weakened against the dollar in 2018, these factors were not enough to encourage soya farmers to continue selling their beans, they said.
Brazilian soyabean premiums, which surged to $2 per bushel above the price of Chicago futures after China announced plans to slap duties on United States soya imports, have since dropped to around $1.35 per bushel. Luiz Fernando Roque, a consultant at Safras & Mercados, said soyabean trading activity picked up since the end of March, albeit this week the pace had subsided due the fall of port premiums.
"Over the past few days trading levels edged closer to historical averages," Roque said. Roque estimated farmers sold about 1 million tonnes of soyabeans last week after the announcement that China would tax US soya imports by 25 percent, but so far this week only about 400,000 tonnes worth of Brazil's soyabean had been traded. Brazilian farmers had sold 52 percent of this year's projected crop through April 6, more than 3 percentage points below levels seen at the same time in 2017, according to a Safras & Mercados report.
The situation indicates Brazilian farmers remain cautious since last week, when a trade group said high freight costs after the summer soya harvest, and exchange rate volatility, were cause for concern. The US dollar has gained more than 3 percent against Brazil's currency this year though by mid-afternoon trading on Wednesday those gains were pared by almost a third.
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