February 15, 2007

 

CBOT Soy Review on Wednesday: Settles lower on fund, speculative sales

 

 

Chicago Board of Trade soybean futures settled lower Wednesday as spillover weakness from neighboring markets weighed on prices amid fund and speculative selling, sources said.

 

March soybeans closed 4 1/2 cents lower at US$7.50 1/2 per bushel, while May soybeans ended down 5 cents at US$7.66 1/2. March soymeal finished US$0.10 down at US$222.60, and March soyoil closed 33 points lower at 29.68 cents per pound.

 

CBOT corn and wheat also ended lower, providing a negative tonnee for soybeans, floor sources said. There was some profit-taking in soybeans after strong gains Tuesday, a floor trader added.

 

Further pressure came from funds selling an estimated 2,000 contracts.

 

In pit trades, RJ O'Brien sold 500 March, while Rand Financial sold 400 March and UBS sold 400 May. Calyon and Iowa Grains each sold 300 March. Fimat bought 400 may, and JP Morgan bought 300 May. Spread trading was a feature of the day with ADM spreading 1,300 March/May and Iowa Grains spreading 1,000 May/March.

 

In its annual long-term "baseline" report, the U.S. Department of Agriculture said fewer acres will be sown with soybeans during the next 10 years as farmers plant more and more corn in order to meet rising ethanol demand.

 

The U.S. produced about 3.188 billion bushels of soybeans last year, but that will drop to just 2.9 billion bushels for the 2007-08 marketing year, according to the report. Soybean production won't halt its decline until 2009 when output is predicted at 2.88 billion bushels.

 

By 2016, the USDA expects production to get back up to 3.085 billion bushels, according to the report.

 

The news was not considered surprising as market participants have been talking for weeks about their expectations for a switch of U.S. acres from soybeans to corn, sources said. The market pulled back somewhat after the report was released in a bit of a "buy the rumor, sell the fact" scenario, a trader added.

 

The drop in crush also was seen by some as a sign of decline in demand for U.S. soybeans, a bearish development, analysts said.

 

The National Oilseed Processors Association's January soybean crush report also was released Wednesday and considered slightly bearish, traders added. The report lowered U.S. crush from December and increased soyoil stocks.

 

NOPA reported its members crushed 148.858 million bushels of soybeans during January, below the average trade estimate of 149.1 million bushels and the 149.2 million NOPA reported for December. Estimates for the report ranged from as low as 147 million to as high as 152.3 million.

 

Soyoil stocks increased to 2,739 billion pounds, up from the 2.605 billion reported in December. The average of trade estimate pegged stocks at 2.720 billion pounds.

 

In other news, Brazil's main biodiesel feedstock is likely to remain soy for the next four to five years, despite fears of soaring oilseed prices and keen local interest in non-food crops such as the physic nut, an analyst at local Safras & Mercado consultancy told Dow Jones Newswires.

 

Despite Wednesday's losses, soybeans still remain technically strong after hitting contract highs recently, sources said. Concerns about excessive wetness in Brazil also remain an underlying supportive feature, they noted.

 

Persistent rains on tap through the next week in Mato Grosso will further delay soybean harvest and damage the quality of the soybean crop, the DTN Meteorlogix weather firm said. Some e-mail images have been circulated showing soybeans sprouting in the pod in Mato Grosso during the past few days, Meteorlogix noted.

 

Also, the threat of soybean rust continues for later-season soybeans in the northern half of Brazil's soybean belt, including Mato Grosso, Mato Grosso do Sul and Goias, the firm reported.

 

The USDA on Thursday will release weekly export sales for the week ended Feb. 8. Analysts surveyed by Dow Jones Newswires estimate sales will be between 450,000 and 700,000 metric tonnes.

 

 

SOY PRODUCTS

 

CBOT soybean product futures finished lower as spillover weakness from crude oil and fund selling weighed on soyoil, sources said. Funds sold an estimated 3,000 soyoil contracts.

 

Soyoil stocks also exceeded expectations in NOPA's January soybean crush report, a floor trader noted.

 

Soymeal traded higher earlier in the session with the March contract setting a new high of US$224.60, exceeding the previous high of US$223.30. Meal prices pulled back with soybeans after the USDA's baseline projections were released without any bullish surprises, a floor source said. Weakness in soybeans kept meal on the downside, sources said.

 

Fimat spread 800 May/March soymeal. In soyoil spread trades, Fimat spread 1,000 May/March, while Rand Financial spread 500 May/March, and RJ O'Brien spread 400 May/March.

 

In soyoil pit trades, Bunge bought 800 March, while Goldenberg Hehmeyer bought 500 May and Rosenthal bought 400 March. Prudential sold 500 May, and FC Stonnee sold 500 January.

 

For weekly export sales, analysts predict soymeal sales will range from 75,000 to 150,000 and soyoil sales will range from zero to 10,000.