February 2, 2007

 

CBOT Soy Review on Thursday: Ends higher; trims gains on corn weakness

 

 

Chicago Board of Trade soybean futures closed modestly firmer Thursday after trimming gains under pressure from declines in the corn market, analysts said.

 

March soybeans finished 2 cents higher at US$7.21 1/2 a bushel, while May soybeans ended 3 cents higher at US$7.37 1/2. March soymeal closed up US$0.50 at US$207.90 per short tonne, and March soyoil finished up 24 points at 29.58 cents per pound.

 

Corn is "the focal point everybody hinges on," and its weakness weighed on soybeans and wheat during the day session, noted Dale Durchholz, senior analyst with AgriVisor.

 

"The beans really are following along behind the corn," Durchholz said. "That's probably the real story here at this point."

 

Soybeans, however, felt early support from stronger-than-expected weekly export sales, floor traders said.

 

The U.S. Department of Agriculture reported Thursday that weekly U.S. soybean export sales for the week ended Jan. 25 were 677,700 metric tonnes, above analysts' expectations of 450,000 to 650,000 tonnes. The sales were 10% above the week earlier and 3% above the prior four-week average.

 

Major buyers included China, which took 177,200 tonnes, and Mexico, which bought 135,900 tonnes.

 

Concerns about dryness in South America also were seen as bullish, sources added.

 

Hot, dry weather is continuing to stress corn and soybeans in Argentina, according to the DTN Meteorlogix weather firm. The firm calls for temperatures into the middle of next week to reach into the 90s and approach the 100-degree mark.

 

There is a possibility of light showers bringing a little relief in the next few days, Meteorlogix noted.

 

Temperatures in Brazil are trending above normal. There has been some rain, but it has been generally been light with some locally heavier coverage, Meteorlogix said.

 

Concerns about moisture stress in South America are "a moderate factor at this point," Durchholz said. "It's still an anxiousness at this point."

 

In other news, Brazil's January soybean exports rose to 528,900 metric tonnes compared to 471,100 tonnes exported in December, the Foreign Trade Ministry said Thursday. January 2007 exports declined in comparison to January 2006 exports of 716,100 tonnes.

 

Brazil's soy exports will likely start increasing over the next two months as Mato Grosso, the No. 1 soy producer, advances along in the harvest. Brazil is expected to harvest a record-breaking 55 million tonnes, according to government estimates.

 

In CBOT soybean pit trades, Fimat bought 500 March. UBS sold 600 March, while Rand Financial sold 400 March and Citigroup sold 300 March. Iowa Grains spread 1,600 May/November.

 

Funds bought an estimated 1,000 contracts.

 

 

SOY PRODUCTS

 

CBOT soy product futures ended firmer on strong export sales and with spillover strength from soybeans, traders said.

 

The USDA reported soymeal sales totaled 160,500 tonnes, exceeding analysts' predictions of 25,000 tonnes to 125,000 tonnes. Canada was the top buyer with 52,600 tonnes.

 

Soyoil sales, meanwhile, were 37,300 tonnes, above estimates of zero to 30,000 tonnes. China was the primary buyer with 26,000 tonnes.

 

Soyoil also saw support from funds buying an estimated 2,000 soyoil contracts. Funds were called even in soymeal.

 

In soyoil pit trades, Fimat bought 1,000 March. Bunge and Tenco each bought 400 March, while ADM and Citigroup each bought 400 March. JP Morgan sold 700 March, and Goldberg Hehmeyer sold 400 May.

 

In soymeal trades, Tenco spread 400 March/May.

 

In other news, Brazil's soymeal exports declined to 801,500 tonnes in January compared to 979,000 tonnes in December and 858,600 tonnes in January 2006, the trade ministry said.

 

Soyoil exports declined substantially, hitting just under 40,000 tonnes compared to 151,100 tonnes in December and 129,600 tonnes in January 2006, according to the government's figures.