US and South America soya rivalry to heat up

The US dominance of the global soyabean market from the fall will be increasingly challenged by the growing output in Brazil and Argentina, an industry official from South America said on Friday. Exports from Brazil and Argentina, the world's second and third largest soya exporters after the United States, typically wind down from September when freshly-harvested US supplies begin making their way across the world. "It is going to be like one harvest world-wide," Jose Aroldo Gallassini, president of COAMO, Latin America's largest food crop based co-operative that chalked up nearly $1 billion in revenue in 2003, told Reuters in an interview.
"It's better for us to sell from July until December," he said through an interpreter under the din of business at the Chicago Board of Trade after helping launch the first-ever South American soyabean contract.
The contract will be the first to allow the delivery of a CBOT traded commodity outside the United States. Two ports in Brazil have been designated as delivery locations.
The debut of the contract underlined the growing clout of Brazil and Argentina in the soyabean market, with their combined production already exceeding that of the United States.
Brazil is widely forecast to produce more soyabeans than the United States by the end of the decade as the country opens vast new areas to farms that stretch over thousands of acres.
Gallassini said farmers in Brazil have been holding back a portion of their soya crops this year because of poor prices, adding that the 'carryover' of those supplies into the period when the US crop is harvested will heat up the competition. "We will see things like that in the coming years because the farmer is selling slowly," he said.
The slow pace of selling by the price savvy farmer in Brazil has already put a dent in the country's soyabean exports this year as prices stay relative high.
Brazil's Vegetable Oils Industry Association (Abiove) said export registrations as of May 15 were 30 percent lower at 11.8 million tonnes in the current season that began in February from 17 million a year ago.
Gallassini said Brazil's soyabean exports have also been hampered by the rising value of the local real against the dollar, the currency of trade for commodities. Exporters pay for soya in real while their earnings are in dollars.
On the South American soyabean contract, Gallassini said he was hopeful that it would be a success, adding that his own co-operative would lead the way in using the market.