February 8, 2006

 

CBOT Soy Review on Tuesday: Lower on speculative sales; USDA awaited

 

 

Chicago Board of Trade soybean and soy product futures ended lower Tuesday after speculative sales triggered sell stops following losses in outside commodity markets and on bearish soybean supply and demand outlooks, brokers said.

 

"All the commodities across the board are down, and that put pressure on soybeans," one CBOT soybean trader said.

 

Several CBOT floor brokers had noted before Tuesday's opening bell that losses in gold and energy futures could unnerve CBOT soy bulls.

 

Moreover, speculation that the U.S. Department of Agriculture would Thursday boost its 2005-06 U.S. ending soybean stocks estimate weighed on CBOT soybeans, brokers said.

 

Analysts forecast the government would report Thursday U.S. 2005-06 soybean ending stocks at 527 million bushels, just below the U.S. record carryover of 536 million bushels set in 1985-86. The analysts' estimates for USDA's end-stocks estimate this month ranged from 452 million bushels to 555 million bushels.

 

The USDA on Jan. 12 forecast 2005-06 U.S. soybean ending stocks at 505 million bushels; U.S. soybean ending stocks in 2004-05 totaled 256 million bushels.

 

The U.S. marketing year for soybeans runs from Sept. 1 through Aug. 31.

 

"We're not on pace to meet export demand," said one veteran soybean analyst. "Five hundred-plus (million bushels for ending stocks) is still heavy, so right now it's just a degree of how big the increase is going to be."

 

Spread trade was featured through the first half of Tuesday's CBOT soy open-outcry session. Tuesday was the first day of the Goldman Sachs roll, when index positions are rolled to deferred months ahead of the CBOT March soybean delivery cycle.

 

CBOT March soybeans settled Tuesday down 13 cents at US$5.74, below its 10-day moving average of US$5.84 and well below its key 100-day moving average of US$5.91.

 

CBOT March soymeal settled down US$4.30 at US$176.70 a short tonne, below its 100-day moving average of US$181.30; and March soyoil ended down 29 points at 22.28 cents a pound, below its 10-day moving average of 22.09 cents.

 

In pit trades, Fimat Futures, Iowa Grain and Calyon each spread 800 May/March while Man Financial, Rand Financial and DT Trading were early buyers of March.

 

CBOT South American soybean futures also ended lower Tuesday. The March futures settled down 13 cents at US$5.95 per bushel.

 

In Argentina's key soy producing areas of Cordoba, northern Buenos Aires and Santa Fe, near-term forecasts called for increasing chances for showers and cooler temperatures, according to Meteorlogix weather service.

 

In Brazil, producers in the northern part of top soy-growing state Mato Grosso were harvesting beans, but rains were forecast for later this week.

 

Meanwhile, Brazilian traders said the local soybean market was subdued for a second week amid a weak dollar and CBOT soy losses.

 

"Nobody is selling," said a trader from one U.S. multinational in Brazil's northeast. "The dollar is more important today than the prices in Chicago."

 

On Monday and Tuesday, two separate government estimates put Brazil's 2005-06 soy crop at more than 58 million metric tonnes. However, some private estimates Tuesday were lowered due to dry weather in the southwestern corner of Parana state, a major producer, and dry weather in December in small producing regions such as southern Rio Grande do Sul, Santa Catarina and western Bahia.

 

Brazilian farm research and consulting firm AgroConsult forecast a 56.3- million-tonne crop.

 

Overnight U.S. soybean export news was quiet, while interior U.S. truck and Gulf of Mexico barge and rail basis bids fell Tuesday, cash sources said.

 

In other news, the CBOT said Tuesday it will launch a soybean crush spread options contract on Friday, Feb. 24. The soybean crush is a spread used by oilseed processors to establish the price they will pay for their inputs - soybeans - and the price they will receive for their end products - soymeal and soyoil.

 

 

SOY PRODUCTS

 

Soymeal futures ended lower Tuesday, down US$4.10 to US$5.10 per tonne in the five nearby months, with late speculative sales following only modest early fund buying, brokers said.

 

In soymeal trades, Produce Grain spread December/July while Goldenberg Hehmeyer and Refco Inc. were early buyers of March, brokers said. Prudential Financial sold about 300 May, they noted.

 

March oil share ended at 38.67%, and the March crush was at 47 3/4 cents.

 

Soyoil futures also closed lower Tuesday on commercial and late speculative sales after funds bought about 2,000 lots early, brokers said. The nearby five contracts settled down 0.14 cent to 0.29 cent per pound.

 

In soyoil trades, Fimat Futures, Iowa Grain and Calyon each spread about 700 May/March, brokers said.

 

Tenco Inc. and Cargill Inc. were noted sellers of March and May while R.J. O'Brien, O'Connor and Co., Fimat Futures and Man Financial were noted buyers of March, they said.