Pressure on soy continues

- Last updated on GMT

Related tags: Brazil

Brazil's soybean crushing industry is worried at the growing number
of farmers breaking contracts following an explosion in prices this
year, reports the American Soybean Association.

"The growth of Brazil's soy industry was based on trust between farmers and buyers. If they start breaking contracts, that will all fall apart,"​ said Fabio Trigueirinho, executive secretary of the Brazilian Vegetable Oil Industries Association (Abiove).

According to the report​ farmers in the centre-west typically sell a large portion of their crop before planting in order to finance production. Producers lost out this year because of this strategy as prices in the interior exploded.

Producers say Brazilian civil law advocates contractual renegotiations in the event of major price movements between when the contract is signed and when it comes into force.

Across the Atlantic and into Italy the ASA reports that the Italian soy area has fallen by 3.8 per cent year-on-year in 2004 to 146,275 hectares, according to Italian farm association ISMEA.

The main reason for the reduction was the difficulties faced by farmers in finding non-GM seeds, ISMEA analysts said. According to ISMEA, Italy is likely to produce 540,000 tonnes of soybeans in 2004. This volume would represent a 39 per cent increase over the 2003 crop. However, last year's crop was 30 per cent lower than in 2002 as a result of hot, dry weather.

In the US, severe soy shortages mean that the soybean situation remains critically tight with much higher prices likely to be needed to balance a 'short supply with demand' that has yet to be rationed, concluded ASA.

Related topics: Market Trends

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