January 6, 2006

 

CBOT Soy Review on Thursday: Ends down on speculative sales, weak cash

 

 

Soybean and soy product futures on the Chicago Board of Trade settled lower Thursday. Losses were tied to speculative sales, soymeal deliveries, weak U.S. cash soybeans and meal, an increased Brazilian soy crop estimate, varying Argentine crop weather forecasts and news of two human bird flu deaths in Turkey, sources said.

 

"Also, at the thinnest time of the year, we're waiting for the index buying to be done," one CBOT soy broker said.

 

Fresh buying has been anticipated from commodity index funds, which buy and hold commodities similar to indexes that buy and hold stocks or bonds.

 

The indexes had their fourth year of gains in 2005 despite rising U.S. interest rates and a stronger dollar, and index fund managers are thought to have about US$70 billion to invest, up from US$10 billion just five years ago.

 

CBOT March soybeans finished 13 3/4 cents lower at US$6.18 1/2 a bushel, March soymeal settled US$5.60 lower at US$191.30 a short tonne, and March soyoil ended 39 points lower at 23.21 cents a pound.

 

All three CBOT March soy futures contracts slipped below their key 200-day moving averages.

 

In soybean trades, funds sold about 6,000 lots. Rand sold 800 March, Citigroup sold 800 March, and R.J. O'Brien and Calyon Financial each sold about 500 March, brokers said.

 

News that two teenagers had died in Turkey of the deadly H5 strain of bird flu again raised the specter of possible reduced global soy consumption if the disease advances.

 

In South American soy news, CBOT traders noted varying forecasts for Argentine soybean belt weather after recent dry, hot conditions prompted crop concerns.

 

"There's some question that the weather pattern might change late next week in Argentina's soy belt," one broker said.

 

In Brazil, the Census Bureau, or IBGE, said in its second soybean crop estimate that Brazil would harvest an estimated 59.2 million metric tonnes of soy in the 2005-06 crop, up almost 16% from the 58.7 million tonnes estimated in October 2005. The soy harvest begins in February in some states.

 

South American soybean futures settled steady. The March futures ended flat at US$6.55.

 

 

SOY PRODUCTS

 

Soyoil futures ended lower following soybeans and meal and weak energy futures, brokers noted.

 

Commodity funds were net sellers of about 3,000 soyoil futures, led by Citigroup's sale of 600 March. Rand Financial and JP Morgan each sold 300 March; Calyon Financial bought 300 March; and Fimat bought 400 March. FC Stonnee bought 200 March; Cargill Inc. bought 300 March; and Term Commodities sold 400 March, brokers said.

 

Soymeal futures ended weaker Thursday, led by losses in nearby January after Bunge delivered 240 lots Thursday.

 

Cash soymeal basis offers continued to weaken, while CBOT traders noted soy crushers have continued to buy soybeans on the price downturn and that lower natural gas prices could have cut crushers' operating costs.

 

Commodity funds sold at least 6,500 lots, with Man Financial selling 1,300 March. Tenco Inc. sold 300 January; ADM Investor Services sold 300 March; and JP Morgan, Rand Financial and the Refco division of Man Financial each sold 300 March. Cargill Inc. bought 1,000 March and Bunge bought 600 March.

 

March oil share climbed to 37.76%, and the March crush was at 44 1/2 cents.