January 8, 2008

 

CBOT Soy Review on Monday: Slides in setback amid forecasts for rain

 

 

Chicago Board of Trade soybean futures stumbled Monday in a setback from recent gains amid pressure from forecasts for wetter weather in Argentina, analysts said.

 

January soybeans fell 13 cents to US$12.36 per bushel, and March soybeans slid 12 3/4 cents to US$12.49 3/4. March soymeal finished US$3.80 lower at US$344.50 per short tonne, and March soyoil settled 43 points lower at 50.75 cents per pound.

 

Soybean futures had room to pull back after racing to new all-time highs last week, traders said. Commodity funds sold an estimated 3,000 contracts.

 

Bullish concerns about hot, dry weather in South America also eased during the weekend after rains hit Argentina, traders said. Showers and thunderstorms brought up to 1 inch precipitation to Argentina's primary crop areas Sunday, according to DTN Meteorlogix.

 

More beneficial rains are expected later this week, particularly Thursday. Argentina could see another 1.5 inches of moisture, Meteorlogix said.

 

"Weekend temperatures were hot, with highs in the 90s Fahrenheit," Meteorlogix said. "However, crop stress was eased due to the rainfall. The rainfall this week will further ease stress to pollinating corn and developing soybeans."

 

Brazil's soybean belt, meanwhile, had rains of up to 1.5 inches in the northern areas - including Mato Grosso, Mato Grosso do Sul and Goias - and up to 1 inch in the southern half, primarily Parana, Meteorlogix said. The next week to 10 days should feature more favorable weather for developing soybeans throughout the major growing areas, with periodic rains and generally mild temperatures, the private weather firm said.

 

A firmer U.S. dollar was seen as another bearish factor for soybeans. Strength in the greenback makes U.S. commodities less attractive to foreign buyers.

 

There also are expectations that index funds in the coming days will buy corn while selling thousands of contracts of soybeans and wheat as part of an annual rebalancing. Traders in the soy market may have been trying to get out in front of the expected fund sales, an analyst said.

 

It's unknown what the total impact of the rebalancing will be. The Dow Jones-AIG Commodity Index Fund, for one, looks as though it will have to lighten up its long positions in soybeans and soyoil, but it doesn't seem as though it involves "all that many contracts," said Anne Frick, senior oilseed analyst for Prudential Bache Commodities in New York.

 

Expectations for the rebalancing are "certainly not a bullish factor" for the trade, Frick said, "but how much pressure it's adding, I don't know."

 

AgResource Company estimated funds will have to sell a daily average of 6,000 contracts of soybeans and 7,000 contracts of wheat and to buy 4,000 contracts of corn. The biggest impact will be in the wheat markets, the firm said.

 

In other news, the U.S. Department of Agriculture said weekly soybean export inspections were 24.798 million bushels, at the low end of trade estimates of 22 million to 31 million. It was the second consecutive week inspections were at the low end of estimates.

 

 

Soy Products

 

CBOT soy product futures ended lower with soybeans. Profit-taking and fund selling weighed on the markets, traders said.

 

Commodity funds sold an estimated 2,000 soymeal contracts and 2,000 soyoil contracts. In soymeal pit trades, Fortis sold 500 July, and JP Morgan sold 300 July. In soyoil pit trades, Rand Financial bought 600 December, while Bunge bought 200 March and sold 300 March. JP Morgan bought 300 March and sold 100 March and 100 May.