January 26, 2007

 

CBOT Soy Review on Thursday: Lack of supportive news pressures prices

 

 

Chicago Board of Trade soybean futures ended with modest losses Thursday amid long liquidation and a lack of supportive news to attract fresh buying, analysts said.

 

March soybeans finished down 1 3/4 cents at US$7.13 1/4 a bushel, and May soybeans closed 2 cents lower at US$7.28 1/2. March soymeal closed down US$0.20 at US$208.20 per short tonne, while March soyoil finished 31 points weaker at 28.92 cents per pound.

 

The March and May soybeans contacts ended at their lowest levels since Jan. 16.

 

The contracts trimmed losses near the end of the session as CBOT corn rebounded, but it was not enough to pull soybeans to a stronger close, a floor source noted.

 

Prices had opened firmer but quickly became planted in negative territory, unable to attract enough new buying to stay on the upside, the source added. Instead, long liquidation weighed on prices, he said.

 

Fund selling of an estimated 5,000 contracts also pressured soybeans lower during the session, a floor broker said.

 

In pit trades, Citigroup sold 800 March, and Rosenthal sold 700 March. Tenco, Term Commodities and Goldenberg Hehmeyer each sold 500 March. Fimat sold 500 March and 500 July. UBS bought 1,200 March.

 

Fundamentally, weekly export sales were seen as neutral because they fell in line with analysts' expectations, sources noted.

 

The U.S. Department of Agriculture reported weekly U.S. soybean export sales for the week ended Jan 18 totaled 615,500 metric tonnes. Analysts had estimated export sales would be between 500,000 and 700,000 tonnes.

 

The weekly sales were 44% below the previous week and 20% under the prior 4-week average, the USDA said. The biggest buyer was China, which took 260,300 tonnes.

 

In another report, the U.S. Census Bureau said the U.S. soybean crush for December was 156.2 million bushels, slightly above the average analyst estimate of 156.1 million.

 

"I didn't see anything in the crush report to shake you up too much," said Sid Love, analyst with Kropf & Love Consulting.

 

Favorable crop weather in South America was another fundamentally bearish feature of the day session, a broker noted.

 

Major crop areas of South America have mostly favorable weather during the next five days as soybeans move farther into the pod-filling stage and early harvest continues in Brazil, the DTN Meteorlogix weather firm reported.

 

"You're looking at a record world crop," Love noted.

 

The Agriculture Federation of Goias, the fifth-largest soybean producer in Brazil, said heavy rains haven't yet caused any crop damage. Heavy rainfall was expected throughout the state all day Thursday and rain is likely over the next four days, a local weather service said.

 

In Argentina, however, next week offers the prospect of some very hot weather developing in La Pampa and Buenos Aires provinces, where temperatures may jump to more than 100 degrees Fahrenheit for daytime highs, Meteorlogix added. Ahead of the heat wave, a round of thundershowers promises to bring up to one inch of rainfall to most of the central crop belt, the firm noted.

 

"This rain will be critical in allowing crops to ward off stress damage from the oncoming heat wave," Meteorlogix said.

 

Looking ahead, Love said corn would still give direction to soybeans.

 

"Corn is still the driver," he said. "If corn were a dollar lower, soybeans and wheat would be a lot lower. They'd be a dollar lower as well. That's the key."

 

 

SOY PRODUCTS

 

The USDA reported weekly soymeal export sales totaled 34,400 tonnes, a marketing-year low that was below analysts' expectations of 75,000 tonnes to 150,000 tonnes. The sales were 85% below the previous week and 73% under the prior 4-week average.

 

The USDA said soyoil sales were 2,300 tonnes, at the low end of analysts' estimates of none to 10,000 tonnes.

 

As for the Census report, Love said soyoil stocks were "huge" at 3.068 billion pounds, which exceeded the average estimate of 3.007 billion. Soymeal stocks also exceeded expectations at 467,345 short tonnes, above analysts' average estimate of 357,000 tonnes.

 

The Census stocks data were seen as negative, although sources said their influence probably played out within the first 15 minutes of trading.

 

Light fund selling and spillover weakness from crude oil futures also weighed on prices, a floor trader added. Funds sold an estimated 1,500 soymeal contracts and 1,500 soyoil contracts, he said.

 

In soymeal pit trades, Rand Financial sold 800 March, and Tenco sold 500 March. Funds sold an estimated 1,500 contracts. In soyoil pit trades, Rand Financial and JP Morgan each bought 300 March. JP Morgan also sold 400 March, while Man Financial sold 500 March and Bunge sold 300 March.