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Soybean prices hit 15-year high

Editor's note: The following is one of a number of stories written in the wake of high soybean prices, which are the result of a weather-driven abberation.

(Friday, March 26, 2004 -- CropChoice news) -- Michael Smith, Bloomberg News, 03/24/04: SAO PAULO, Brazil - Soybean prices surged to a 15-year record Monday on the Chicago Board of Trade as trucks carrying the grain backed up 43 miles at a port south of Sao Paulo where a labor dispute stopped shipments.

Fifty ships were anchored in and around Paranagua, Brazil's biggest soybean port, as grain companies stopped operations to protest shipping delays they blame on the management of the state-run port.

The lockout of 11,000 dockworkers is blocking shipment of 80,000 metric tons of soybeans a day to Europe and other markets. Unions support the lock-out to press 31 demands for better wages and benefits, including the right to overtime, said Fabiano Elias, a lawyer for several dockworker's unions at the port.

"Everyone is behind this action, and it won't end until the port management is replaced," Elias said.

The four-day shutdown has contributed to an 85 percent jump in soybean prices in the last year as global demand surged.

"Nobody can get any beans out of there ... so prices are going to have to go up," said Troy Vetterkind, a trader at eHedger in Chicago.

Soybeans for May delivery rose 32 cents, or 3.1 percent, to $10.56 a bushel Monday after rising 7.1 percent last week.

Infrastructure lacking

While the port problems are the cause of the latest price spiral, Cargill Inc., the largest U.S. agriculture company, says transportation bottlenecks will limit future growth of Brazil's soybean industry.

Brazil, the world's second-largest soybean grower, will only boost production 4 percent this year, a sixth the pace of last year's gain, said Jose Luiz Glaser, who runs Cargill's soybean business in Brazil.

"Growth is going to be smaller as a function of a lack of infrastructure to move a much bigger crop," Glaser said in an interview in Sao Paulo.

Wayzata, Minn.-based Cargill will handle almost a fifth of the 54 million metric tons of soybeans that Brazil will probably produce this year, Glaser said.

Brazil more than doubled soybean production over five years to meet rising demand from Europe and China.

Flooding, droughts and a blight known as Asian soybean rust led Brazil and the United States to cut official forecasts for this year's crop.

Backed up ports

Even before the latest labor problems, Paranagua was already plagued by problems that are causing ships to wait 30 days to be loaded, Glaser said.

"This chaotic situation is really hurting us," said Cesar Borges de Sousa, vice president of the Brazilian vegetable oil processor's association.

Brazilian President Luiz Inacio Lula da Silva has pledged to boost spending on ports, railroads and highways to increase exports the country needed to revive an economy that last year had its biggest slump since 1992. Brazil's agriculture ministry estimates soybean sales will surge 43 percent to $12 billion this year, or 15 percent of expected total exports.

Farmers in Brazil have planted more crops as demand grew from China, which has more than doubled imports of soybeans, mostly to make into animal feed as meat demand improves.

For more, please go to the source of this story at http://www.dailyherald.com/search/main_story.asp?intid=38069103#