January 12, 2006

 

CBOT Soy Review on Wednesday: Extends retreat; braces for USDA reports

 

 

Chicago Board of Trade soybean futures ended moderately lower Wednesday, continuing a retreat from prior gains as the market braces for bearish supply data from U.S. Department of Agriculture.

 

March soybeans finished 4 1/2 cents lower at US$5.84 1/2; March soymeal settled US$0.70 lower at US$181.70 a short tonne; and March soyoil ended 28 points lower at 22.15 cent a pound.

 

The defensive tonnee was consistent throughout the day in relatively quiet action, with the lack of speculative buying, definitive talk of improving crop conditions in Argentina and outlooks for higher production and inventories from the USDA keeping pressure on prices, analyst said.

 

Wednesday's setback extended the market's losing streak to five consecutive days, with the active March futures inching closer to filling a chart gap down to US$5.79 left from Dec. 12. Over the five-day period March futures are down 47 3/4 cents.

 

The U.S. Department of Agriculture is scheduled to release its annual crop production, supply and demand and quarterly grain stocks reports Thursday at 8:30 a.m. EST (1330 GMT).

 

The average of analysts' estimates from a Dow Jones Newswires survey pegged 2005 U.S. soybean production at 3.061 billion bushels from a range that spans 3.020 billion to 3.101 billion bushels. The average analyst's estimate projects first-quarter stocks at 2.442 billion bushels from a range of 2.399 billion-2.482 billion. The average ending stock estimate pegged the 2005/06 soybean carryout at 452 million bushels. The range of estimates was 405 million to 508 million bushels.

 

USDA is scheduled to release its weekly export sales report at 8:30 a.m. EST. Analysts surveyed by Dow Jones Newswires anticipate weekly U.S. soybean export sales for the week ended Jan. 5 to fall within a range of 450,000 to 650,000 metric tonnes.

 

Meanwhile, the DTN Meteorlogix forecast said a high-pressure ridge moving to the east, allowing moisture to come south that will alleviate hot, dry conditions in Argentina. Up to 2 inches of rain over the next few days will ease stress on developing corn and soybeans.

 

Crops in the southern Brazilian states of Rio Grande do Sul and Parana will continue to be stressed by temperatures above normal (breaking 100 F) and rainfall below normal. Mato Grosso and Mato Grosso do Sul will see some light showers in the southern areas and some locally heavier rains farther north, but probably not enough to break the stressful conditions, Meteorlogix added.

 

In pit trades, ADM Investor Services, ABN Amro and Fimat were key buyers. On the sell side, Refco Division of Man Financial sold 1,500 March and 500 May, ABN Amro sold 500 March and Iowa Grain sold 300 March.

 

South American soybean futures ended lower. The March futures ended 5 cents lower at US$6.10.

 

 

SOY PRODUCTS

 

Soy product futures quietly followed soybeans lower, with technically inspired speculative selling featured attractions. A general unwillingness of traders to take on added risk heading into Thursday's USDA reports helped limit activity and kept a defensive tonnee in the markets.

 

Both soymeal and soyoil managed to penetrate underlying technical support, with light position evening producing a choppy atmosphere that enabled soymeal to gain some product share on the day, said a cash connected CBOT trader. March oil share ended at 37.87%, and the March crush was at 59 cents.

 

In soymeal trades, buyers were scattered among various firms. Fimat, Man Financial, O'Connor and Tenco were featured sellers.

 

In soyoil trades, Fimat, Iowa Grain, Refco Division of Man Financial and Rosenthal were key buyers, with Fimat, RJ O'Brien, Rand Financial, and Refco Division of Man Financial key sellers.