February 7, 2007

 

CBOT Soy Review on Tuesday: Retreats to modest losses on late sales

 

 

Chicago Board of Trade soybean futures retreated into negative territory Tuesday after trading higher for much of the session on expectations of a smaller spring planting, sources said.

 

March soybeans closed 1 1/4 cents lower at US$7.38 3/4 per bushel, while May soybeans ended 2 1/4 cents lower at US$7.54 1/4. March soymeal closed US$0.90 higher at US$213.30 per short tonne, and March soyoil finished 25 points down at 30.37 cents per pound.

 

Profit-taking seemed to drive prices down late in the day, floor sources said. There also was some spillover pressure seen from weakness in the energy complex, an analyst added.

 

The main focus of the soybean market, however, rests on concerns that soybeans need to keep pace with CBOT corn futures to prevent producers from planting corn over soybeans in the spring, said Dan Zwicker, senior analyst with AgriVisor.

 

"Beans are playing catch up to corn," Zwicker said.

 

Trading was somewhat range-bound during the session as market participants were looking ahead to Friday's scheduled release of a U.S. Department of Agriculture supply/demand report, one trader added. The report will include a new estimate of U.S. soybean ending stocks.

 

In pit trades, Rand Financial sold 400 March, while UBS bought 300 March. Term Commodities spread 1,500 Nov/July, and ABN Amro spread 900 Nov/July.

 

Funds bought an estimated 600 contracts.

 

There also was some support from ideas that the South America's soybean crop may not be getting any larger, a source added.

 

"Some private types do think the South American crop is tucking in some," he said.

 

South American crop areas continue to experience generally favorable weather conditions, although there have been concerns recently about dryness in parts of Argentina and southern Brazil, sources said.

 

Argentina's central crop belt had isolated showers and cool temperatures Monday, and the moderate temperature pattern will continue this week, the DTN Meteorlogix weather firm reported. During the coming weekend, additional showers will move into Argentina, generally favoring the southern half of the crop belt, which is the sector in greatest need for rainfall, Meteorlogix said.

 

Southern Brazil, meanwhile, had up to 3/4 of an inch of rain Monday, and additional scattered showers will occur this week, according to the weather firm.

 

Brazil's 2006-07 soy crop should be a record 57.5 million metric tonnes, agribusiness consultancy AgRural said in a note Tuesday.

 

Nearly 40% of Brazil's 2006-07 soy crop was aggressively sold early in the season, with local sales rising every time the CBOT found reason to push soybean futures higher, sources said.

 

Some of that soy is being delivered this week from the center-west states, though just 13% of Brazil's crop has been harvested up to now, according to AgRural.

 

 

SOY PRODUCTS

 

CBOT soyoil futures ended lower on borrowed weakness from crude oil futures, sources said. Soyoil continues to look to the energy market for direction, they added.

 

The energies "are the new big players in the price of corn and soybeans," an analyst said.

 

Soymeal closed higher but trimmed gains at the end of the session as soybeans moved into negative territory, a trader noted. Cold weather in the Midwest was somewhat supportive for meal as traders expect livestock to receive more feed, a source added.

 

Fund activity also boosted soymeal and weighed on soyoil, traders said. Funds bought an estimated 1,000 soymeal contracts and sold an estimated 1,000 soyoil contracts.

 

In soymeal pit trades, Tenco bought 500 May. In soyoil pit trades, JP Morgan sold 900 May. Tenco and Bunge each sold 500 May, while Citigroup sold 400 May.