February 1, 2007

 

CBOT Soy Review on Wednesday: Retreats from gains in choppy trade

 

 

Chicago Board of Trade soybean futures Wednesday retreated from firm early gains and closed lower on end-of-the-month profit-taking, sources said.

 

March soybeans ended down 1 1/2 cents at US$7.19 1/2, while May soybeans closed 1 3/4 cents lower at US$7.34 1/2. March soymeal ended down US$1.00 at US$207.40 per short tonne, while March soyoil closed down 12 points at 29.34 cents per pound.

 

Profit-taking has been a feature of trading throughout the week as funds looked to lessen their length in the soybean market, said Tim Hannagan, analyst with Alaron in Chicago.

 

"All the funds were heavily long in the beans," Hannagan said. "They came in looking to take some profits this week. The funds like to balance those books."

 

Soybean futures showed weakness early with a mixed opening after trading slightly higher overnight, sources said. There was no fresh news out to feed the bulls, they added.

 

Prices then found support in the neighboring CBOT corn market and from gains in crude oil futures, which also lifted soyoil futures, an analyst said. Speculative-led buying was a feature before the close, floor sources noted.

 

The onset of a cold snap in the U.S. Midwest also was likely supportive to soybeans as the severe conditions slow cash grain movement, Hannagan noted.

 

"We're starting to see the cash price stabilizing and firming up a little bit," he said. "A lot of people think the cash price is going to move up and pull the futures price up with it."

 

In pit trades, USA Grains bought 1,000 March. RJ O'Brien bought 500 March, and Fimat bought 300 March. UBS sold 700 March, while Rand Financial sold 300 March. Iowa Grains spread 700 September/July.

 

In the long term, Hannagan said soybeans may feel a boost from a possible liquidation of March corn contracts ahead of first notice day. Traders do not want to be long in corn ahead of a March U.S. Department of Agriculture report, which is expected to show an increase in corn plantings, he said.

 

"A lot of people have got to get out of corn this month, and they're going to be rolling into beans," Hannagan said.

 

In other developments, approximately one-fourth of the Argentine soybean belt is under moisture stress, resulting in some initial declines in yield potential during the early stages of pod set, a Cropcast agricultural weather report stated.

 

The concern area is unlikely to expand much during the next 10 days as rains fell in much of the region last week, Cropcast noted. Dryness could, however, expand "very rapidly" if rains fail to become more general during the next 11 to 15 days, according to the report.

 

The USDA is scheduled to release its weekly export sales report Thursday for the period ended Jan. 25. Analysts surveyed by Dow Jones Newswires predicted sales would total 450,000 to 650,000 metric tonnes.

 

 

SOY PRODUCTS

 

Soy products also gave up early gains and finished weaker with soybeans.

 

Trading was choppy during the day session as soyoil followed movements in crude oil, sources said. Soyoil also saw early follow-through buying support from an increase in palm oil futures overnight, a floor broker added.

 

In soyoil pit trades, Goldberg Hehmeyer bought 800 December. Bunge and Iowa Grains each bought 500 March. Fimat sold 600 May. Funds were estimated to be even.

 

In soymeal pit trades, Fimat bought 800 March and sold 400 March. Funds bought an estimated 1,000 contracts.

 

For Thursday's USDA report, analysts said they expected soymeal export sales to total 25,000 to 125,000 tonnes. Soyoil sales are estimated at nothing to 30,000 tonnes, according to the analysts.