February 23, 2006

 

CBOT Soy Review on Wednesday: Down on Argentine rain,bird flu,technicals

 

 

CBOT soybeans ended lower Wednesday, after setting session lows late, on technical and speculative sales along with rains in Argentina's soy belt, forecasts for more rain Thursday and the spread of deadly bird flu in Europe and India, brokers said.

 

"Losses in CBOT corn and wheat also helped pull soybeans lower," said Mike Hagan, a CBOT soy local trader.

 

CBOT May soybeans ended Wednesday down 14 1/2 cents at US$5.86 1/2 a bushel.

 

CBOT May soymeal closed down US$4.50 at US$177.70 a short tonne and May soyoil settled down 35 points at 23.14 cents a pound.

 

Much-needed precipitation in Argentina's soy growing belt at a crucial yield-determining time sparked the losses, one broker said.

 

Rains and thunderstorms of 0.50 to 1.50 inches, locally heavier, began Wednesday and were forecast to linger through Thursday in Argentina's soy growing region, said Joel Burgio, meteorologist at Meteorlogix weather service.

 

"Coverage should be very good, about 70% to 80% or more," he said. "There is potential that the rains may bring severe storms, with possible strong winds and hail during the next 24-48 hours."

 

Hot temperatures Wednesday, with highs in the 90s, were expected to cool to highs in the 70s Fahrenheit by Friday, he said. Light rains are also possible next Tuesday and Wednesday, Burgio added.

 

Southern Brazil's key soybean growing areas of Rio Grande do Sul through Parana were expected to have rains of up to 1.50 inches Thursday into Friday, DTN said.

 

CBOT South American soybean futures also ended lower Wednesday. The CBOT May futures settled down 4 1/2 cents at US$6.11 1/2 per bushel.

 

Concerns about a slowdown in poultry consumption amid the spread of a deadly strain of bird flu in Europe also weighed on CBOT soy futures, brokers said.

 

In Wednesday's soybean pit trades, commodity funds were net sellers, brokers estimated. O'Connor and Co. sold 1,200 May, Man Financial sold about 900 May, Calyon Financial and R.J. O'Brien each sold about 700 May and Fimat sold 800 July, brokers said. Bunge Grain sold 500 July while ADM bought 200 March and 100 May, they noted.

 

Rolling of nearby CBOT March soybean and soy product futures was noted ahead of the Feb. 28 first notice day for the CBOT March soy delivery cycle.

 

There were 1,903 soybean contracts registered with the exchange for delivery purposes as of Tuesday afternoon. There were 5,379 soyoil registrations and 34 soymeal registrations. CBOT registrations are updated daily at 4 p.m. CST.

 

In spread trade, Rosenthal Collins spread 2,000 November/March while Fimat spread 1,500 March/May, they said.

 

In soybean options trade, ADM bought 1,000 March US$5.80 puts, brokers said.

 

Midday spot U.S. soybean barge basis bids were unchanged Wednesday, cash sources said.

 

Traders awaited Thursday's U.S. Census Bureau crush report, scheduled for release at 7 a.m. CST.

 

U.S. soybean crush for January was expected to be 152 million bushels, up 4 million bushels from the U.S. Census December crush figure of 148 million bushels.

 

U.S. Census January soyoil stocks are seen rising to 2.484 billion pounds, up 295 million from 2.189 billion pounds in the previous month.

 

U.S. Census January soymeal stocks were expected to be 341,700 short tonnes, up 3,900 tonnes from the January tally of 337,800 short tonnes.

 

Traders also noted that the new CBOT soybean crush spread options contract will begin trade Friday. The soybean crush is a spread used by oilseed processors to establish the price they will pay for their inputs and the price they will receive for their end products - soymeal and soyoil. The ticker symbols are BC for calls and BP for puts.

 

 

SOY PRODUCTS

 

CBOT soymeal futures ended lower Wednesday on speculative sales and concerns about a drop in soybean demand as the deadly bird flu virus spreads in Europe and India.

 

The nearby five contracts ended down US$3.50 to US$4.50 per tonne.

 

In soymeal trades, funds sold at least 2,000 lots, brokers said. Fimat sold 800 May, O'Connor and Co. sold 500 May, and Man Financial sold 400 May, they noted.

 

In spread trade, JP Morgan spread 600 May/March, while ADM and Tenco Inc. each spread 300 May/March, brokers said.

 

CBOT May oil share ended at 39.43%, and the May crush was at 59 cents.

 

Soyoil futures also closed lower, with the nearby five CBOT soyoil contracts closed Wednesday down 0.30 to 0.35 cent per pound.

 

In Wednesday's soyoil trades, commercials were net buyers while funds were net sellers. Rand Financial sold 600 May, Tenco Inc. bought 500 May, the commercial arm of JP Morgan bought 400 May and 200 March, and Bunge Grain bought 200 March, 200 July and 100 May, brokers said.

 

In spread trade, R.J. O'Brien and Iowa Grain each spread 400 March/May and JP Morgan spread 400 May/March, brokers said.