February 16, 2006

 

CBOT Soy Review on Wednesday: Short-covering lifts market

 

 

Soybean futures on the Chicago Board of Trade rose slightly after fund-led short-covering took prices off their lows and placed them onto positive ground in the final 45 minutes of the session, sources said.

 

Forecasts for drier weather in southern Brazil and Argentina helped spark the gains, an analyst said.

 

Most-active May soybeans gained 3 cents to US$5.99 and March beans rose 3 3/4 cents to US$5.87. May soymeal gained 10 cents to US$184.40 a short tonne and May soyoil rose 24 points to 22.67 cents a pound.

 

"The weather in (southern) Brazil at noon went slightly drier, and it looks like the next best chance of rain in Argentina is more in the seven to 10-day range," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Conditions begin to turn dry in southern Brazil and worsen further south into Argentina.

 

Recent rains in Argentina have been beneficial for the crop, the Agriculture Secretariat there said, estimating the soybean crop at 38.5 million to 40 million tonnes. If the crop receives adequate rain, production will match the estimate, it said.

 

But additional moisture may be slowing in coming, according to forecasts. Hot, dry weather with readings in the 90s and 100s Fahrenheit will stress the Argentine soybean crop and that weather pattern will remain in place through the middle of next week, weather service DTN Meteorlogix said.

 

Brazil's Parana province has a shot at rain on Friday, with up to 1 inch possible, while Rio Grande do Sul will see just scattered showers and no more than 0.50 inch of rain before the end of the week, DTN Meteorlogix said.

 

Early pressure in the soybean market that drove May futures down to a US$5.71 session low and the weakest price since Jan. 26, was due to index-fund-related selling and talk that the U.S. Department of Agriculture may raise 2006-07 U.S. soybean ending stocks above 600 million bushels at its annual Outlook Forum that begins Thursday, traders and analysts said.

 

The ability of the market to rebound and close higher was encouraging for market bulls, however, and may help set up a steady to firmer opening on Thursday. Weekly export sales also will determine the market's action and most traders and analysts look for soybean sales in the 400,000-600,000 metric-tonne range, compared to 562,300 tonnes the previous week.

 

At the CBOT, ABN Amro sold 1,000 Mar and 800 May, Calyon Financial sold 1,000 Mar, JP Morgan sold 600 May and 200 Nov, Fimat sold 500 May and 200 Mar, Man Financial sold 400 May and 500 Mar, O'Connor and Rand Financial each sold 500 May, Refco sold 500 Mar and UBS sold 400 Mar and a net 400 May.

 

ADM bought 1,000 Mar to lead the buyers.

 

Fimat spread 1,100 May/Mar at 12 3/4 cents. Shatkin Arbon spread 1,000 at 12 1/4 and Iowa Grain spread 600 at 12 1/2 cents.

 

Funds sold an estimated 8,700 contracts on the day, but that didn't account for the late price rally.

 

 

SOY PRODUCTS

 

The product markets closed steady to mixed as those prices also came off their lows along with the late rally in soybeans.

 

May soymeal finished with a slight gain on short-covering, after touching a one-week low of US$179.00 earlier in the session. The contract settled at US$184.40 a tonne.

 

Fimat was the largest buyer of meal at 300 May and 200 Mar contracts, with CIS and Calyon each selling 200 Mar.

 

May soyoil finished the day in the black and the buying in beans and meal spilled over into the oil pit and boosted the market. May bounced off a two-week low at 22.15 and rallied up to 22.98 before settling at 22.67 cents.

 

Bunge bought 300 May and 400 Mar oil, Citigroup bought 200 May and 300 Mar, Fimat bought 200 May, Goldenberg-Hehmeyer bought 300 Mar, and Rosenthal and Tenco each bought 200 Mar.

 

CIS sold 400 Mar, Man Financial sold 300 Mar and 200 May, R.J. O'Brien and Kottke each sold 300 Mar, while O'Connor and Prudential each sold 200 Mar.