January 16, 2008

 

CBOT Soy Review on Tuesday: New-crop leads gains amid acreage fight

 

 

Chicago Board of Trade soybean futures settled higher Tuesday amid bear spreading and as the market continued to fight for acres with corn and wheat, analysts said.

 

Nearby March soybeans rose 5 cents to US$13.01 1/2 per bushel, and new crop November soybeans jumped 22 cents to US$12.85. March soymeal finished up US$3.60 at US$356.10 per short tonne, and March soyoil closed up 14 points at 53.31 cents per pound.

 

New crop November soybeans surged to a new contract high of US$12.97 early in the session, exceeding the previous high of US$12.95. The market opened higher and quickly soared to new highs on bullish speculative momentum as the quest to buy spring acres remained a driving force, analysts said.

 

Bear spreading kept the focus on deferred months as the market worked to secure acres in a competition with corn and spring wheat, said John Kleist, analyst for Kleist Ag Consulting. All the crops want to expand plantings to increase output and loosen up tight supplies.

 

"You've got some bear spreading going on obviously because of the so-called acreage battle," Kleist said. "Nobody wants to be aggressive short sellers that I know of. It's still too explosive of a situation."

 

There was also some support seen from declining estimates for Brazil's 2007-08 soy crop. An analyst at Celeres said farmers in the south planted more corn than expected, which means less soy area than the market anticipated.

 

Early estimates saw planted soy area growing by as much as 9%, and now groups like Celeres are putting it down to 3% to around 21.4 million hectares. The official crop estimate is 58.2 million metric tonnes, with Celeres estimating under 60 million tonnes for the first time this week after months of putting the crop over 63 million tonnes.

 

Weather will be more of a factor for the CBOT soybean market if Brazil plants fewer soybeans, Kleist said. Brazil's central and northern soybean areas, from Parana through Mato Grosso, have generally favorable weather for developing soybeans during the next week to 10 days, according to DTN Meteorlogix.

 

In far southern Brazil, Rio Grande do Sul province, the third-largest soybean producer in Brazil, has a higher chance for scattered thunderstorms during the six-day period, Meteorlogix said. Rain would help ease any stress to developing soybeans, but the pattern still needs to be watched, the private weather firm said.

 

The reduced estimate for Brazil plantings "puts a bigger spotlight on their weather situation and allows our market to maintain a premium," Kleist said.

 

Commodity funds bought an estimated 1,000 contracts at the CBOT. In pit trades, JP Morgan bought 500 March, while MF Global bought 400 March and sold 100 March. RJ O'Brien bought 300 March.

 

 

Soy Products

 

CBOT soy product futures ended firmer in a bounceback from early profit-taking, traders said. Fund buying and concerns about forecasts for bitterly cold weather boosted soymeal, an analyst said. Soyoil rose with support from the rest of the complex and amid speculative buying, a trader said.

 

Commodity funds bought an estimated 2,000 soymeal contracts. In soymeal pit trades, MF Global bought 500 May, 500 July and 300 September. Citigroup sold 400 March and 200 May, and Newedge USA LLC sold 400 March and 100 May. In soyoil pit trades, JP Morgan bought 400 March and sold 300 March. Citigroup bought 300 March and 200 May, while RJ O'Brien sold 300 March.