SAO PAULO (Dow Jones)--Activity in Brazil's soybean market began toimprove this week as a result of the lowered estimate for the 2004-05 U.S.soybean crop, traders said."Volumes were not spectacular but were better than they have been inrecent weeks," said Steve Cachia, a trader at Cerealpar brokerage inParana.Volumes are expected to continue to show mild improvements asproducers seek to take advantage of price increases, Cachia said."There were several funds that entered the market this week," saidOdineia Santos, an analyst at Safras e Mercados, noting the rise in pricesat the Chicago Board of Trade futures market.On Aug. 12, the U.S. Department of Agriculture estimated the 2004-05soybean crop at 2.877 billion bushels, down from the July estimate of2.940 billion bushels. This is still up from last year's drought-ravagedcrop of 2.418 billion bushels.Farmers in the southern state of Rio Grande do Sul have sold 50% oftheir 5.6 million-metric-ton crop, well below previous year's, accordingto Seneri Paludo, an analyst for AgRural consultants in Mato Grosso."Producers in Rio Grande do Sul can afford to hold on to the soy theyhave with the hope that prices will rise," he added.In neighboring Parana, producers still have 30% of their harvest whileMato Grosso has less than 10% remaining, Paludo said.At the port of Paranagua, soybeans were trading at 42.00 to 42.40Brazilian reals per 60-kilogram bag ($1=BRL2.99) on Thursday. Prices werevolatile last week and ranged from BRL41.50 to BRL 42.50. In Ponta Grossa,in northern Parana, soy prices were between BRL39.50 and BRL40.50.Discounts for September soybean shipments from Paranagua againstSeptember soybean futures on the Chicago Board of Trade stood at 50 centsto 60 cents over during the past week, compared with $0.55 to $0.60 perbushel quoted the week before.Demand from Asia is beginning to show some improvements, but sales ofsoymeal and soy oil have been stronger than sales of soybeans, accordingto Paludo.