February 15, 2006

 

CBOT Soy Review on Tuesday: Ends weak on brazil rain forecasts, USDA

 

 

Chicago Board of Trade soybean and soymeal futures ended lower Tuesday on light rain forecasts for Brazil's Rio Grande do Sul this week and speculation the U.S. Department of Agriculture at its Outlook Conference Friday will forecast 2006-07 U.S. soy end stocks at possibly more than 600 million bushels, brokers said.

 

"The (National Oilseed Processors Association January) crush report was a little bit better than some people had expected, which is supporting the meal and is helping to support the beans, as is continued dryness in Argentina," said Anne Frick, an oilseed analyst at Prudential Financial in New York.

 

NOPA on Tuesday reported its members' January crush totaled a larger-than-expected 145.6 million bushels while soyoil stocks grew to 2.057 billion pounds.

 

"But it's (the CBOT soy market) fighting the overall pattern for a large U.S. carryover, big world stocks and probably indications of a surplus next year at the Outlook conference this week," Frick said.

 

She described Tuesday's CBOT soy price action as "sideways trade, with no momentum in either direction."

 

CBOT May soybeans closed down 1 3/4 cents at US$5.96; March ended down 1 cent at US$5.83 1/4.

 

CBOT May soymeal ended down 30 cents at US$184.30 per short tonne, and May soyoil ended down 20 points at 22.43 cents per pound.

 

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 CBOT soybean pit trades, speculators were light sellers while commercials were noted buyers, brokers said. Cargill Inc., clearing JP Morgan, bought 600 March and 200 May, ADM Investor Services bought 200 March, Iowa Grain bought 400 March and Rand Financial sold 200 May, brokers said.

 

Spreads were featured Tuesday ahead of first notice day on Feb. 28 for the CBOT March delivery cycle. R.J. O'Brien spread 1,500 May/March, Fimat spread 1,300 May/March, the Refco division of Man Financial spread 1,000 March/July and 1,000 May/November, R.J. O'Brien spread 1,000 November/July and Fimat futures spread 1,000 March/May, brokers said.

 

In soybean options trade, Tenco Inc. sold 500 March US$5.90 calls while Citigroup bought 400 March US$5.80 puts and sold 400 April US$6.40 puts.

 

A sagging midday Gulf soybean barge bid also weighed on CBOT soy, sources said.

 

In the interior U.S., spot soybean basis bids hover 5-47 cents a bushel below year-earlier levels in various states, with the deficit standing at 27 cents in Iowa, last season's top-producer, sources said.

 

"The current record-high stocks-to-use ratio of 19.9% has kept basis depressed throughout the season," said Cash Grain Bids Inc. analyst Kevin McNew.

 

CBOT South American soybean futures also ended weak Tuesday. The CBOT March futures settled down 1 cent at US$6.33 per bushel while May closed down 2 cents at US$6.17.

 

At the CBOT and in Brazil, soy traders and other sources noted the real's strength against the dollar had slowed Brazilian soy sales.

 

The dollar fell to 2.14 Brazilian reais from Monday's close of BRL2.15 and previous closes of BRL2.17 as record exports brought a surplus of dollar bills into the Brazilian economy, sources noted.

 

In the first two weeks of February, exports brought into Brazil more than US$2.3 billion, 6.4% more than the first two weeks of February 2005 and the highest value since the start of the year, the Brazilian Commerce Ministry said Monday.

 

 

SOY PRODUCTS

 

CBOT soymeal futures ended mixed Tuesday, with the nearby five CBOT soymeal contracts down 30 cents to up 50 cents per tonne.

 

Traders noted fresh news of the expansion of the deadly strain of bird flu, this time in Austria.

 

In soymeal trades, funds traded both sides lightly, while commercial Bunge bought 100 May during the quiet session. Rosenthal Collins bought 200 May and sold 200 March, Refco Inc. bought 100 May and sold 200 March, brokers said.

 

In spread trade, R.J. O'Brien spread 600 May/March and 700 March/May while Tenco Inc. spread 300 November/July.

 

CBOT March oil share ended Tuesday at 37.65%, and the March crush was at 60 3/4 cents.

 

Soyoil futures closed lower on Tuesday with the nearby five CBOT soyoil contracts down 0.18 to 0.22 cent per pound.

 

In Tuesday's soyoil trades, commodity funds were net sellers while commercials were net buyers, brokers said. Cargill Inc., clearing through JP Morgan, bought 400 March and 100 May, Prudential Financial bought 400 March and 400 May, Man Financial and Calyon Financial each sold 400 March and JP Morgan sold 300 March, brokers said.