All's far from well in the GM paradise of Brazil. With prices plummeting and farmer indebtedness increasing, Brazilian farmers must need expensive GM seeds like a hole in the head.
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Soy Stocks Run Out At Brazil Crusher On Farmer Protests http://news.morningstar.com/news/DJ/M05/D11/200605111320DOWJONESDJONLINE001000.html?Cat=Staples

SAO PAULO -(Dow Jones)- Soybean stocks ran out Thursday during the peak soy export season at Sperafico Agroindustrial, a soy crusher in Mato Grosso, because protesting farmers have successfully closed grain silos and blocked all farm commodity transit in the state, the company's commercial manager told Dow Jones Newswires.

"Soy stocks ran out today. We've now officially stopped crushing soybeans. We have nothing left in our storage facilities in Paranagua either," said Benecio de Souza, commercial manager at Sperafico Agroindustrial. Paranagua is Brazil's No. 2 soy shipping port.

Protests by farmers in Mato Grosso have made deliveries of soybeans impossible to local soy-crushing facilities like Sperafico, a private company that crushes soybeans into soymeal and soyoil for local and international markets.

Sperafico is one of the largest soy crushers in Parana, but has a much smaller presence in Mato Grosso. The company has five soy crushing units in Brazil with more than 40,000 clients locally and worldwide and the capacity to crush over a million tons of soybeans annually.

Souza said he expected major international firms like Bunge (BG) and Archer Daniels Midland (ADM) to run out of soy stocks this week, if not Thursday, in Mato Grosso because of the farmer blockade.

Bunge and The Brazilian Vegetable Oils Industry Association did not comment on the situation.

A soy buyer at Sperafico in Parana said that stocks also ran out Thursday at their unit in Mato Grosso do Sul, their second-largest unit after Parana.

"We still have soybeans in stock in Parana, but the situation will worsen on Monday because farmers here promised to close more roads," the soy buyer said.

The company said it is under no threat of a force majeure. Other units in Sao Paulo and Parana have been able to pick up the slack so far.

Jaqueline Alves, a soy broker at brokerage firm Multisafras, said smaller soy crusher Encomid Clarion ran out of stocks this week as well. Clarion crushes roughly 900 tons per day.

"All contracts coming out of these states are going to arrive late. What happens as a result now depends on the buyers," Alves said.

Souza said that clients were "understanding" of the delivery problems for the time being. In worst-case scenarios, clients could put legal pressure on companies like Sperafico to honor contracts or look for product elsewhere, such as Argentina. Argentina is also finishing its 2005-06 soy harvest and is the world's third-largest soy exporter.

Public stocks of soybeans dipped again at the Paranagua port to 109,000 metric tons from 178,620 tons on Wednesday, according to the booking department at Transcar Maritime Shipping Agency. Genetically modified soybeans in storage also dipped for the third day in a row to 4,650 tons, roughly 50% less than Paranagua's public terminals had in storage on Wednesday.

Rail shipments are being blocked in some areas of Parana as of Monday, also making arrivals of soy to Paranagua difficult. Parana has an advanced soy market, so it would be very difficult to block all transport routes to the port, traders say.

A soy trader at a U.S. multinational in Sao Paulo said private stocks at the port were stable, at roughly 229,000 tons, up from 188,000 tons on Wednesday.

"Business today is just price fixing soybeans already in storage. Volume for new soy is practically zero," said a trader at a soy exporter in Sao Paulo.

Farmers are protesting low local commodity prices. In most of the soy belt, soy prices paid by industry do not come close to covering production costs, according to industry consensus. High diesel fuel costs and a weak U.S. dollar have made the current farm crisis one of the worst Brazil has seen in decades.

The dollar rose 1.51% against the Brazilian real to BRL2.09 in afternoon trading Thursday, but still far below the roughly BRL2.40 exchange that farmers had during the planting season. The trend has been for the real to continue gaining strength against the dollar in the near term, which is bad news for soy farmers, whose final product is quoted in U.S. dollars, not Brazilian reals.

The government promised tax breaks and other emergency farm aid programs to be announced this month. But local brokers doubt the government aid package will help soy farmers much because growers are also facing two years of massive debt burdens with private lenders. Less than a third of the financial resources that center-west farmers tap for planting and harvest comes from government banks and buying programs, meaning debt rollovers - a popular emergency measure - has minimal impacts on the soy market.

Farmers promised to take the protest nationwide on May 16.

-By Kenneth Rapoza, Dow Jones Newswires; 5511-3145-1488; kenneth.rapoza@ dowjones.com

(END) Dow Jones Newswires

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