January 23, 2007

 

CBOT Soy Review on Monday: Mixed with eye on CBOT corn

 

 

Chicago Board of Trade soybean futures ended mixed but little changed Monday as traders continued to watch activity in the neighboring corn market, analysts said.

 

March soybeans finished 1/2 cent lower at US$7.32 3/4 a bushel, and May finished up 1/4 cent at US$7.32 3/4. March soymeal finished US$0.10 lower at US$209.20 per short tonne, while March soyoil ended 1 point higher at 29.31 cents a pound.

 

Soybeans were firmer late in the session before some last-minute selling tugged on prices amid ideas that the market is in an overbought condition after recent rallies, sources noted.

 

Overall, however, traders were focused on corn futures as the markets are battling for 2007 acreage, analysts added. Corn ended lower but still lent support to soybeans, they said.

 

Corn prices have rallied recently amid growing interest in ethanol and biodiesel fuels, and after a bullish USDA report lowered production and ending stocks estimates.

 

"I think beans still continue to receive support from the big runup that we've had in corn," said Dan Zwicker, senior analyst with AgriVisor. "Corn probably got a little bit more overbought than soybeans did on the runup."

 

Looking ahead, Zwicker said he expected the link between corn and soybeans "is going to stay with us through the planting."

 

Funds buying an estimated 2,000 contracts during the day session also was seen as mildly supportive, a floor broker noted.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental Commitments of Traders Report that index funds were reported to hold net long positions totaling 131,234 combined CBOT soybean futures and options contracts as of Jan. 16, up from 130,193 in the prior week. Traditional large speculative traders were net long 49,973 contracts.

 

In pit trades, Calyon bought 1,000 March. Man Financial and RJ O'Brien each sold 400 March. ABN Amro spread 1,000 March-July.

 

In other news, the U.S. Department of Agriculture reported weekly U.S. soybean export inspections for the week ended Jan. 18 totaled 21.918 million bushels, below analysts' expectations. Analysts surveyed by Dow Jones Newswires before the USDA released the data estimated inspections would range between 25 million and 34 million bushels.

 

The latest inspections also fell below the 29.274 million bushels inspected for export a week earlier.

 

They were not seen affecting trade as attention was focused on corn, a CBOT floor broker said.

 

Mostly favorable weather conditions in South America, meanwhile, are considered bearish for soybeans, CBOT floor sources said.

 

South American crop areas have few major weather problems to start out this week, the DTN Meteorlogix weather firm noted.

 

Brazil's entire soybean belt had rains during the past three days, with moisture totaling more than 2 1/2 inches in the Rio Grande do Sul and Parana provinces in the south, Meteorlogix said.

 

"Warm temperatures and periodic showers will continue this week in Brazil, offering continued favorable weather for soybean pod-filling," the firm reported.

 

Argentina's central crop belt also had some showers during the weekend, which helped to bring an end to a late week heat wave in the country, Meteorlogix said.

 

Argentina will produce a record 87 million metric tonnes of grain and oilseeds from the 2006-07 crop, the Rosario Grain Exchange reported Monday. Soybean production is estimated at 43 million tonnes, according to the exchange.

 

Heavy rainfall in November and December has led to expectations of high yields, particularly with the developing soy and corn crops, according to analysts. The exchange sees soybean exports of 6 million tonnes, while 6.4 million tonnes of soyoil and 28 million tonnes of soymeal will be shipped. Argentina is the world's leading exporter of soyoil and soymeal.

 

Paraguay's 2006 soybean exports, meanwhile, fell 21.1% compared to a year earlier, according to the latest data from the Paraguayan Cereal Exporter Chamber.

 

Soybean exports last year totaled 2.27 million metric tonnes, down from 2.88 million tonnes in 2005, according to Capeco. Soy production totaled 3.59 million tonnes, down from 4.04 million tonnes grown in 2005.

 

 

SOY PRODUCTS

 

CBOT soy products also ended mixed and near unchanged.

 

Soymeal followed soybeans and moved lower on late selling in that market, a floor broker said. Soyoil, meanwhile, has felt some support from increased consumption of oilseeds, especially in China, an analyst added.

 

Overall, trading was choppy, sources said.

 

In soyoil pit trades, JP Morgan bought 300 March. Funds sold an estimated 700 contracts.

 

In soymeal pit trades, Fimat sold 300 March.

 

Index funds were net long combined soyoil futures and options positions by 66,703 contracts, down from the previous week's 68,478 lots, the CFTC said. Speculative funds were reported net long 38,346 lots.

 

Large speculative traders were reported net long combined futures and options positions in soymeal by 18,127 lots, compared with net longs of 7,645 contracts last week, according to the CFTC.

 

In other news, traders said they were awaiting President Bush's State of the Union address Tuesday night as he is expected to address alternative fuels.