January 20, 2007

 

CBOT Soy Review on Friday: Stronger energy prices offer support

 

 

Chicago Board of Trade soybean futures ended higher Friday, with support from larger-than-expected export sales and strengthened energy markets, analysts said.

 

March soybeans ended 1 1/2 cents up at US$7.17 3/4 a bushel, and May ended 1 1/4 cents higher at US$7.32 1/2.

 

March soymeal settled US$2.00 lower at US$209.20 per short tonne, while March soyoil ended 48 points higher at 29.30 cents a pound.

 

The U.S. Department of Agriculture reported soybean sales for the week ended Jan. 11 were 1.095 million metric tonnes, a 86% rise the week earlier and 62% gain over the prior four-week average. Analysts' estimates for the sales ranged 400,000 to 800,000 tonnes.

 

"That is the second-highest weekly sales report of the crop year," said Bill Nelson, analyst with AG Edwards & Sons. Nelson called the news "very supportive."

 

CBOT soybean futures opened higher with support from the sales and from light fund buying, floor sources noted.

 

Stronger energy markets, including a rebound in crude oil futures, gave soybean futures further support, analysts added. The Brazilian real also was stronger, which is positive for CBOT soybeans prices, Nelson said.

 

Overall, trading activity was relatively light, floor sources said. There was some short covering ahead of the weekend, they said.

 

Private analytical firm Informa Economics released a new soybean acreage estimate, although it wasn't much of a change from its prior estimate in December and so did not affect the market much, sources said.

 

Informa pegged 2007-08 U.S. soybean acreage at 70.878 million acres, down 4.644 million from 2006, the sources noted. U.S. soybean planted acreage in 2006 was at 75.522 million, according to the U.S. Department of Agriculture.

 

On March 31, the USDA is scheduled to the prospective plantings report for the 2007-08 marketing year.

 

Looking at the weather, soybean areas of Argentina have been dry and hot, reaching 100 Fahrenheit, but scattered showers are developing in the region, the DTN Meteorlogix weather firm reported. The showers should "tonnee down the heat and bring needed moisture to the fields," the firm noted.

 

Brazil has been warm to hot with scattered showers, Meteorlogix said. Conditions are mostly favorable for crops, but some spots have been persistently wet enough to raise concerns about Asian soybean rust, the firm added.

 

Mato Grosso and Mato Grosso do Sul, in west-central Brazil, will see isolated showers this weekend, and that activity is expected to pick up into next week, according to the firm's outlook. To the south, the states of Rio Grande do Sul and Parana may get up to 1 1/2 inches of rain by Saturday night, but precipitation will mostly clear by Sunday, Meteorlogix said.

 

"We've had pretty favorable conditions as of late," Nelson said. "It should be very conducive so far for a good yield outlook."

 

Looking ahead, Nelson said soybean futures likely would be tied to activity in the neighboring corn market for "weeks to come." Corn has rallied recently on a new USDA report that lowered production and ending stocks estimates.

 

Unless soybean futures keep pace with corn somewhat, there is talk that producers may replace soy plantings with corn this spring, sources added.

 

"Since we've committed the winter wheat acres, acres have to come out of soybeans," Nelson said. "I think that's the long-term supportive feature under the soybeans."

 

The Commodity Futures Trading Commission on Friday afternoon is scheduled to release the commitment of traders report for the period ending Jan. 16.

 

In pit trades, Calyon and Fortis each bought 500 March. Fimat bought 300 March.

 

 

SOY PRODUCTS

 

CBOT soy-product futures finished mixed after a choppy trading session, sources said.

 

Soyoil closed higher on spillover support from stronger energy prices, an analyst noted. Light fund buying was a feature in soymeal futures, although it was unable to generate much upside enthusiasm as profit-taking ahead of the weekend pressured prices, sources said.

 

Weekly soymeal export sales totaled 221,200 tonnes, the USDA reported, above trade expectations of 75,000 to 125,000 tonnes. The sales were 2 1/5 times the previous week and the prior four-week average.

 

The USDA said soyoil sales were 15,500 tonnes, at the top end of expectations of 5,000 to 15,000 tonnes.

 

In soymeal pit trades, Forits bought 2,000 March. Iowa Grains sold 300 May. Funds bought 1,200. In soyoil pit trades, JP Morgan bought 400 March. Funds bought 1,000.