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Brazil soy premiums jump on renewed demand, logistic hurdles
By Marcelo Teixeira
SAO PAULO, June 15 (Reuters) - Price premiums over Chicago futures for soybean shipments from Brazilian ports jumped in recent days on renewed demand, likely from Chinese buyers, and logistic hurdles in Brazil that have reduced grain availability at the ports.
According to local brokers and analysts, there has been unexpectedly high demand for Brazilian beans in a period when most of the crop has been already sold, possibly due to the trade spat between the United States and China.
Brazilian producers and grain merchants are also pushing for higher values for soy and corn due to a possible rise in transportation costs from the top grain belt in center-west Brazil to ports in the south such as Santos and Paranaguá, as a result of new legislation that increased truck freight prices.
"Whoever still has soy in Brazil is not willing to sell cheap, so premiums over Chicago have to rise to attract seller interest," said Steve Cachia, a broker at Cerealpar in Curitiba, near the No. 2 grains port in Brazil, Paranaguá.
Soy premiums in Paranaguá jumped from 84 cents over CBOT futures on Monday to 120 cents over on Friday <SB-PREMP-C1>,
Carlos Cogo, a grains analyst in Brazil's Rio Grande do Sul state, said Paranaguá premiums for August shipment went up to $1.30 over CBOT, and for the September shipment up to $1.40 over.
Lucas Brunetti, a grains analyst working with São Paulo-based Consultoria Austral, said higher premiums are also a result of falling Chicago futures and the problems with grain transportation in Brazil.
New federal legislation in Brazil, which has been questioned in courts, implemented minimum prices for truck freight that were much higher than previous market values. The law was one of the measures the government took to end the truckers' strike in May.
Brunetti said grain merchants and commodities traders are seeking higher prices for soy and corn to compensate for a possible rise in costs to take grains to ports.
"Some people are afraid of selling forward, because they don't know how much they will need to pay for transportation. Trading margins are very low these days," said Brunetti.
According to Paranaguá and Santos data, the number of trucks with grain that arrived at the ports in June is smaller than reported during the same period last year: In Santos, it is 22.4 percent lower, and in Paranaguá there are 14.2 percent fewer trucks.
Paranaguá said grain truck arrivals have been enough to guarantee loading operations, but not enough to replenish silos after the truckers nationwide strike in May. (Additional reporting by José Roberto Gomes Editing by Leslie Adler)
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