February 17, 2007

 

CBOT Soy Review on Friday: Ends up on weather worries, corn rally

 

 

Chicago Board of Trade soybean futures set new contract highs on bullish long-range weather concerns and spillover support from the neighboring grains markets, traders said.

 

March soybeans closed up 8 1/4 cents at US$7.67 per bushel, while May soybeans ended up 7 3/4 cents at US$7.82 1/2. March soymeal ended up US$2.20 at US$227.30 per short tonne, and March soyoil closed 15 points higher at 29.91 cents per pound.

 

March soybeans set a new contract high of US$7.68 1/2, exceeding the previous contract high of US$7.59 1/2. May soybeans set a new high of US$7.84 1/4, topping the previous contract high of US$7.75 1/2.

 

Support came from ideas that a shift from El Nino into La Nina conditions could produce dry conditions in the U.S. this summer, a floor analyst said. World Weather Inc., a private weather firm, released a new outlook that indicated dry conditions may begin around July, following wetness in the spring, which could delay corn planting.

 

"The market is so hyper right now that it gets spooked at the thought of any weather problems," the analyst said.

 

CBOT corn and wheat also rallied on worries about the weather, creating a bullish tonnee and spillover support for soybeans, floor sources said.

 

There also was some short-covering ahead of the three-day holiday weekend, a floor broker noted. The CBOT will be closed Monday in observance of Presidents Day.

 

Spread trading was another feature of the day session, sources noted. Fimat spread 2,000 May/March, while ADM spread 800 March/May.

 

In pit trades, Goldenberg Hehmeyer sold 500 November. Funds bought an estimated 500 contracts.

 

There also was ongoing support from concerns about the effects of excessive precipitation on Brazil's soy crop, sources said. Showers in Brazil's northern soybean areas, especially Mato Grosso, continue to "snarl harvest progress and adversely affect crop quality," DTN Meteorlogix reported.

 

There also were some supportive rumors on the trading floor that China had swapped a couple cargos of soybeans to U.S. origin from Brazilian origin because of wet weather in Brazil, sources say.

 

In Argentina, farmers have completed soyseed planting across the country, with over 16 million hectares seeded, the Agriculture Secretariat said in its weekly crop report Friday. Dry weather in the southern areas of Buenos Aires and La Pampa provinces is affecting crops in those areas, the Secretariat said. However, heavy showers fell across Argentina's farmlands Thursday night and continued Friday.

 

The 2006-07 soy crop is developing well in Cordoba, Santa Fe and Entre Rios provinces, but plants are suffering from the lack of rainfall in the southern areas of Buenos Aires and La Pampa provinces, the secretariat said.

 

In other news, the U.S. Department of Agriculture reported weekly soybean export sales for the week ended Feb. 8 were 380,700 metric tonnes, below trade expectations. The sales also were 53% below the previous week and the prior four-week average.

 

Analysts had predicted sales would be 450,000 to 700,000 tonnes.

 

Major buyers included China, which took 252,100 tonnes; the Netherlands, which bought 203,100 tonnes; and Germany, which bought 121,300 tonnes. The increases were offset by decreases of 461,000 tonnes for unknown destinations, according to the USDA.

 

The Commodity Futures Trading Commission is scheduled to release the commitment of traders report for the period ending Feb. 13.

 

 

SOY PRODUCTS

 

CBOT soybean products ended in positive territory amid strong fund buying and spillover strength from other markets, sources said. March soymeal set a new contract high of US$227.50 per short tonne, exceeding the previous high of US$226.30.

 

Funds bought an estimated 3,000 soyoil contracts and 2,000 soymeal contracts.

 

Crude oil futures, CBOT soybeans and the grains ended solidly firmer and lent support to the soy products, sources said.

 

In soymeal trades, Fimat bought 800 March. Fimat spread 1,000 July/May and 800 May/March. In soyoil trades, Iowa Grain spread 1,000 July/May.

 

The USDA said soymeal were 135,300 tonnes, 16% below the previous week but 5% above the prior four-week average. Increases were reported for Mexico, which bought 42,800 tonnes, and Guatemala, which bought 33,700 tonnes.

 

The sales were within trade estimates of 75,000 to 150,000

 

Soyoil sales totaled 2,900 tonnes, within trade estimates of zero to 10,000 tonnes. El Salvador and Mexico were the biggest buyers.