Big soybean crops to favor big traders in Brazil, Cargill says
By Gustavo Bonato
SAO PAULO Aug 12 (Reuters) - Brazil's soybean market will see abundant supplies and lower prices next season, which will challenge farmers and favor traders with low costs and good financials, said Cargill's main soybean executive in the country.
In about a month, Brazilian farmers will start sowing what is expected to be a record soybean crop, more or less at the same time the U.S. harvests the biggest soybean crop in history.
"In previous years, it was necessary to move supplies quickly. Now that we have ample stocks everywhere, consumers are not in a rush to buy," Paulo Sousa, Cargill's director for grains and soybean crushing in Brazil, said on Tuesday.
That will help pace Brazil's oilseed sales and exports, but also will squeeze margins and demand higher cost control and efficiency.
"To carry stocks is very capital intensive. Someone must pay. There is a financial cost in keeping grains stocked. Physical infrastructure is also necessary," Sousa told reporters after an event at Cargill's headquarter in Sao Paulo.
Brazil's center-west grain belt has a storage deficit, which big food companies and trading houses, such as Cargill Ltd or Bunge Ltd, have tried to capitalize on by building their own silos and warehouses.
Some farmers also have started to use giant polyethylene bags to keep grain protected when conventional storage is full or not available to avoid having to sell when prices are weak.
Cargill's strategy for the 2014/15 season will be to optimize the use of its warehouse and cargo routings, Sousa said. Continued...