February 8, 2007

 

CBOT Soy Review on Wednesday: Trims gains after new contract highs

 

 

Chicago Board of Trade soybean futures climbed to new contract highs Wednesday but trimmed gains by the close on spillover weakness from the neighboring corn market, sources said.

 

March soybeans finished 2 1/4 cents higher at US$7.41, while May soybeans ended 3 cents higher at US$7.57 1/4. March soymeal closed US$0.40 firmer at US$213.70 per short tonne, and March soyoil settled 6 points up at 30.43 cents per pound.

 

March soybeans set a new contract high of US$7.48 1/4 per bushel, topping the previous contract high of US$7.47 1/2. May soybeans set a new contract high of 7.63 3/4, exceeding the previous high of US$7.63.

 

Support for soybeans came mainly from continued bullishness over an expected acreage loss this spring, analysts said. U.S. producers are expected to plant corn instead of soybeans to take advantage of high corn prices, they added.

 

With thoughts that soybean production will be dramatically decreased, soybean futures prices rallied to contract highs Friday and continued to show technical strength by advancing gains Wednesday, a source said.

 

"Technically, the bean charts look really good," said Doug Harper, analyst with Brock Associates. "We're just kind of chopping around in that general area like the market thinks those gains on Friday were justified."

 

CBOT corn prices grinded lower Wednesday as soybeans traded higher. Corn was "kind of acting as an anchor temporarily," weighing down the soybeans, Harper added.

 

In other news, some traders were looking ahead to Friday's scheduled release of a U.S. Department of Agriculture supply and demand report, which will include new estimates on U.S. soybean carryout and global soybean production.

 

Analysts are predicting the USDA will lower its soybean carryout estimate because of strong U.S. export sales and a fairly aggressive crushing pace. According to a Dow Jones Newswires survey of 16 analysts, the average carryout estimate for the 2006-07 marketing year is 569 million bushels, down from the USDA's January estimated of 575 million. The analysts' estimates ranged from 515 million to 595 million.

 

On Thursday, the USDA is slated to release weekly export sales figures for the week ended Feb. 1. Trade sources expected soybean sales to range from 450,000 tonnes to 700,000 tonnes.

 

The sales data will help give the market direction Thursday morning, said Phil Roach of Roach Ag Marketing.

 

"We'll see what the inputs are tomorrow," he said when asked where the market was headed.

 

Harper added that, although the range trading range won't stay as tight as it has been, prices may stay high until March, when traders get a better handle on how many acres will be planted.

 

In pit trades, Rand Financial bought 700 March, and Iowa Grains sold 500 March. ADM, FC Stonnee and Man Financial each spread 800 March/May. Iowa Grains spread 500 May/March.

 

 

SOY PRODUCTS

 

Fund buying and technical strength from recent gains boosted CBOT soy product futures to a higher close, sources said. Funds bought an estimated 1,300 soyoil contracts and 500 soymeal contracts.

 

The gains were off early highs, however, as soymeal trimmed gains in unison with soybeans, a source said. Soyoil felt spillover pressure as crude oil futures turned weaker, he said.

 

In pit trades, Prudential spread 600 December/July soyoil. JP Morgan spread 500 May/March soymeal, and Fimat spread 1,000 May/March soymeal.

 

On Thursday, analysts expect soymeal export sales to total 75,000 to 200,000 tonnes and soyoil sales to be zero to 10,000 tonnes, according to the survey.