February 3, 2007

 

CBOT Soy Review on Friday: Finishes up on acreage loss expectations

 

 

Chicago Board of Trade soybean futures Friday rallied to new contract highs in several months.

 

Fund buying and expectations that U.S. soybeans acres will be sharply reduced in the spring supported the gains, sources said.

 

March soybeans closed up 15 1/4 cents at US$7.36 3/4, and May soybeans ended 15 cents higher at US$7.52 1/2. March soyoil finished up 79 points at 30.37 cents per pound, while March soymeal closed up US$4.80 at US$212.70 per shot tonne.

 

The March soybean contract set a new contract high of US$7.38 a bushel, exceeding the previous high of US$7.32. May soybeans set a new contract high of US$7.53, exceeding the previous high of US$7.49.

 

Soybeans climbed higher with support from talk that the U.S. crop would lose more acres to corn than had previously been expected, sources noted.

 

Pro Farmer, an agricultural newsletter, released a survey that called for U.S. corn acres in 2007 to increase by 10.9 million-to-11.8 million acres and for soybean acres to decrease by 8.6 million-to-9.4 million acres. Many previous industry estimates had called for a smaller shift.

 

Farmers are expected to plant more corn in part because of increased interest in ethanol.

 

The idea of a smaller U.S. soybean crop was bullish, even though South America is expected to produce a record crop, an analyst said.

 

Funds buying an estimated 4,000 contracts also helped shove prices higher, CBOT floor sources noted.

 

In pit trades, Man Financial bought 2,000 March, while Rand Financial bought 700 March and sold 400 March. ADM bought 400 March and sold 300 March. UBS bought 300 March.

 

In spread trades, JP Morgan spread 500 March/May, Tenco spread 400 March/May and FC Stonnee spread 300 March/May. Man Financial spread 300 May/March, while Prudential spread 400 Nov/March.

 

In other developments, concerns about dryness in South America continued to be viewed as supportive for prices, traders said.

 

In Brazil, Rio Grande do Sul is expected to be dry until Monday, when there might be some scattered showers, the DTN Meteorlogix weather firm said. Chances for rain are better over the next few days in Mato Grosso, Mato Grosso do Sul and Parana, a development that would good for crops, but also encouraging for Asian soybean rust, Meteorlogix noted.

 

Rain in Argentina is expected to be minimal until Monday night, when showers and thundershowers will start and should last until Wednesday, Meteorlogix said. Those rains are mostly in the south, which is where conditions have been the hottest, the firm reported.

 

 

SOY PRODUCTS

 

CBOT soy products closed sharply higher with soybeans.

 

Spillover support from the soybean market gave bullish enthusiasm to the whole complex, a floor source said. Crude oil futures also were higher, which helped lead soyoil higher, he added.

 

Soymeal saw some strength from cold weather in the central U.S., which is expected to prompt an increase of the amount of meal fed to livestock, an analyst noted.

 

Fund buying also supported the products, a trader said. Funds bought an estimated 3,000 soyoil and 500 soymeal.

 

In soyoil pit trades, JP Morgan bought 2,000 March. Goldberg Hehmeyer bought 500 December and 500 March. Man Financial bought 500 March.