February 10, 2007

 

CBOT Soy Review on Friday: Ends up; shakes off bearish USDA report

 

 

Chicago Board of Trade soybean futures finished moderately higher Friday in a rebound buoyed by technical strength and continued bullishness over expectations of an acreage loss this spring, sources said.

 

March soybeans closed 5 1/2 cents up at US$7.49 1/4 per bushel, while May soybeans ended 5 1/4 cents higher at US$7.65 1/2. March soymeal closed US$2.60 higher at US$217.90 per short tonne, and March soyoil closed 9 points lower at 30.34 cents per pound.

 

March soybeans traded electronically at a new contract high of US$7.57, exceeding the previous high of US$7.48 1/4. May soybeans also traded electronically to a new high of US$7.72 1/2, topping the previous contract high of US$7.68.

 

Profit-taking before the close and ahead of the weekend trimmed gains, a source said. Soybeans, however, remain technically strong, he added.

 

Soybeans temporarily tumbled lower shortly after the opening on bearish new U.S. carryout and world crop production estimates from the U.S. Department of Agriculture, floor traders said. Prices then bounced as the market is still focused on ideas that U.S. producers will plant millions of acres of corn instead of soybeans this spring, analysts noted.

 

Looking ahead, analysts said soybeans should hold their technical strength until data is released on spring planting in March, analysts said. Soybeans' ability to rally back strong from the bearish USDA report shows the acreage battle with corn will remain the market's focus in the near-term, he said.

 

As for the new estimates, the USDA increased its 2006-07 soybean ending stocks forecast to 595 million bushels from the 575 million forecast in January. The new estimate was above the average analyst guess of 569 million.

 

The USDA also increased its world carryover estimate from 56.15 million tonnes to 57.4 million.

 

In South America, the USDA kept its production estimate for Brazil unchanged at 56 million. The estimate for Argentina's soybean production, meanwhile, increased from 42.5 million to 44 million.

 

The USDA lowered its U.S. soybean export forecast, it said, primarily because strong competition from South American countries and weaker-than-expected Chinese imports.

 

Brazil's soybean areas have had some significant outbreaks of soybean rust during this growing season, DTN Meteorlogix reported. Reports indicate that rust occurrences are more than tenfold compared with 2006, the weather firm said.

 

During the next week, widespread rainfall is in store for the region, which will further compound the rust potential threat to the Brazilian soybean crop, Meteorlogix said.

 

In pit trades, USA Grains sold 800 March. ADM, Calyon, Fimat, Iowa Grains and Man Financial each sold 500 March. Term Commodities bought 500 March, while Rand Financial and Man Financial each bought 400 March.

 

The May/March spread was popular, sources said. Fortis spread 1,300; RJ O'Brien spread 1,200; Iowa Grains spread 800; Fimat spread 500; and Calyon spread 400. ADM spread 1,200 March/May, and FC Stonnee spread 700 March/May.

 

Funds were estimated to be even.

 

On Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of traders repot for the period ending Feb. 6.

 

 

SOY PRODUCTS

 

CBOT soy products ended mixed.

 

Soymeal showed technical strength after the March contract set a new contract high of US$2.20, exceeding the previous contract high of US$216.50, a floor source said.

 

Soymeal also felt spillover support from gains in soybeans and from funds buying an estimated 1,500 contracts, sources added.

 

In soymeal pit trades, Tenco bought 500 May. Funds bought 1,500. Fortis spread 1,500 May/March.

 

Soyoil, meanwhile, closed modestly lower on speculative selling and some profit-taking, sources said. Trading was choppy during the day session, and commercials bought 2,000 soyoil, a source noted.

 

Spillover strength from crude oil futures also boosted soyoil before a late-session decline, a trader said.

 

In soyoil pit trades, Bunge bought 400 July and sold 500 March. JP Morgan bought 700 May, while Tenco sold 600 May. Prudential bought 500 march, and UBS bought 700 July.

 

Funds sold an estimated 500 soyoil.