Profitability should keep positive

Brazilian soybean growers are optimistic about the next crop (2007/08), betting on good productivity and attractive prices. This scenario should limit the impacts of debts relative to the previous crops and motivate investments.

For a while, good weather conditions, record prices and higher global demand have been confirming this positive context. In the domestic market, trades are moving slowly, as normally occurs in this period of the year. Even with the slow market pace, prices remained moving up, due to the record values at the Chicago Mercantile Exchange (CBOT).

Regarding the global soybean production in the 2007/08 crop, the total volume should reduce roughly 6 percent over the previous crop. The global consumption should keep increasing, roughly 4.7 percent. Soybean inventories, in turn, should decrease around 22.6 percent. Besides the higher demand and the lower supply, other commodities should support soybean values this year.

The oil keeps increasing since Dec/05 at the CBOT. In Dec/07, values overtook 1,040.00 dollars per ton for the first time. Soy meal quotations also remained move up expressively - 350.00 dollars against 205.00 dollars per ton in Dec/06 at the CBOT.

The soybean Index at the Sao Paulo Mercantile Exchange (BM&F) shows prices higher than 24.00 dollars per bag of 60 kilos in 2008. However, growers' profitability will depend, among other factors, on the next crop development. For a while, the hot and wet weather has been helping the culture, but also concerning due to the possibility of increase of the Asian rust disease.

From Dec 28th and Jan 15th, the CEPEA/ESALQ Index (Paraná state) increased 4.35 percent in Real, averaging 46.73 reals or 26.70 dollars per bag of 60 kilos on Tuesday. The ESALQ/BM&F Index for the product delivered in the Paranagua port upped even more: 8.7 percent in Real during the first fortnight, at 48.93 reals or 27.96 dollars per bag.


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