February 14, 2006

 

CBOT Soy Review on Monday: Up on funds, export inspections, weather

 

 

Chicago Board of Trade soybean and soymeal futures ended firm Monday on speculative buying, strong weekly U.S. soybean export inspections and forecasts for drier soy weather later this week in key soy exporters southern Brazil and Argentina, brokers say.

 

"We're in the last three weeks of the key yield development time for soybeans out of South America," said Tim Hannagan, a grain and oilseed analyst at Alaron Trading in Chicago.

 

"The better forecasters tend to see a warmer, drier pattern in Argentina and Brazil from Wednesday through Sunday," Hannagan added. "There is so much money in the market that the slightest little change in the weather format and we've got a 10-cent move."

 

The forecasts for drier South American soy-growing weather later this week follow good rains since last Thursday, brokers noted.

 

Gains were limited as traders eyed the possibility of sagging prices as the South American crop moves to market, they added.

 

"The last couple weeks of February and the first two weeks of March, we seasonally see soybean prices decline as the reality (sets in) that another big crop is coming out of South America," Alaron's Hannagan added.

 

CBOT March soybean futures ended Monday up 2 cents at US$5.84 1/4; CBOT March soymeal closed up US$2.20 at US$182.70 per tonne; and CBOT March soyoil settled down 5 points at 22.22 cents per pound.

 

Rolling of nearby CBOT March soybean and soymeal futures contracts was featured on the fifth and last day of the Goldman roll, the five days when index positions are rolled to deferred months ahead of the CBOT March delivery cycle.

 

At the CBOT, May becomes top step in the soybean pit Wednesday, while its open interest already tops that seen in CBOT March soybeans.

 

In Monday's CBOT soybean pit trades, funds bought 2,400 by 12:30 p.m. CST while commercials were light buyers, brokers said. UBS Warburg bought 2,000 March, Fimat bought a net 600 March, Citigroup bought 500 March and Merrill Lynch bought 300 March, brokers said. ADM bought 200 March and Term Commodities bought 300 May.

 

In spread trade, Fimat spread 1,200 May/March, Calyon Financial spread 700 May/March and R.J. O'Brien spread 700 May/March, they noted.

 

In soybean options trade, Tenco Inc. sold 1,500 May US$6.00 put options.

 

Larger-than-expected weekly U.S. soybean export inspections of 34.088 million bushels, including 19.525 million bushels for China, offered support, brokers said. Estimates had ranged from 20 million to 25 million bushels.

 

First-half February midday cash spot soy barge bids fell 1 cent from morning bids but remained above Friday's levels, cash sources said.

 

CBOT South American soybean futures also ended firm Monday. The CBOT March futures settled up 9 cents at US$6.34 per bushel while May closed up 3 cents at US$6.19.

 

In global soy news, the Buenos Aires Cereals Exchange forecast Monday a 2005-06 Argentine soybean crop of 40 million metric tonnes. If the forecast holds, it would put production up 3% from a year ago, when output totaled a record 38.85 million tonnes, according to the Exchange.

 

The U.S. Department of Agriculture has forecast Argentina's 2005-06 soybean output at a record 40.5 million metric tonnes.

 

 

SOY PRODUCTS

 

CBOT soymeal futures ended higher Monday on speculative buying and steady U.S. soymeal basis offers, with the nearby five CBOT soymeal contracts up US$1.20 to US$2.20 per tonne.

 

In soymeal trades, funds were light net buyers, led by Rand Financial's purchase of March and O'Connor's purchase of May, brokers said. ADM bought 200 May and Bunge Grain bought 200 March while Fimat sold 100 March and 100 May, they noted.

 

In spread trade, ABN spread 600 May/March soymeal.

 

CBOT March oil share ended Monday at 37.77%, and the March crush was at 62 cents.

 

Soyoil futures closed lower on fund and commercial sales, brokers said. The nearby five CBOT soyoil contracts closed Monday down 0.04 to 0.05 cent per pound.

 

Losses in crude oil futures also weighed on soyoil, one CBOT broker said. Soyoil has been underpinned this year by buying on ideas that U.S. biodiesel usage will increase.

 

In Monday's soyoil trades, commercials were net sellers as Bunge Grain sold 500 March and 100 December. ADM bought 100 March, 200 July and 100 May, while Calyon Financial bought 200 March, Tenco Inc. sold 200 March and JP Morgan sold 200 March and 100 May, brokers said.

 

The National Oilseed Processors Association (NOPA) was expected to report Tuesday that its members' January soybean crush totaled 143.5 million bushels, up 1.255 million bushels from the previous report, according to a survey of industry analysts.

 

NOPA said on Jan. 17 that its members' soybean crush during December totaled 142.245 million bushels, down 2.688 million bushels from the previous month.

 

NOPA soyoil stocks in January were expected to rise to 2 billion pounds from the 1.829 billion reported for December. Estimates ranged from 1.930 billion pounds to 2.069 billion pounds.