February 24, 2006

 

CBOT Soy Review on Thursday: Weak on follow-through after thin trade

 

 

CBOT soybeans and soymeal settled slightly lower Thursday on follow-through sales in thin trade and lingering concerns about soy demand due to the spread of bird flu, brokers noted.

 

Rains in Argentina's key soybean growing region, while less than some meteorologists forecast, were deemed bearish, they noted.

 

"It was a really thin trade," one soy broker said. "There was some good spread trade, but we couldn't find a solid bid here and just ended lower."

 

CBOT May soybeans ended Thursday down 1 3/4 cents at US$5.84 3/4, well below Friday's 6-week high of US$6.17.

 

CBOT May soymeal closed Thursday down US$1.00 at US$176.70 per tonne, and May soyoil settled flat at 23.14 cents per pound.

 

In Thursday's soybean pit trades, funds sold 1,000 lots, brokers said. O'Connor and Co. sold 700 May, Fimat bought 400 March and sold 500 May and Rand Financial bought 500 May, they said.

 

Spreading 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 Wednesday afternoon. There were 5,379 soyoil registrations and 34 soymeal registrations, all unchanged from the previous day.

 

CBOT registrations are updated daily at 4 p.m. CST.

 

In spread trade Thursday, JP Morgan spread 600 March/May and 500 May/March; Rand spread 300 March/May; Tenco spread 300 May/March; and Term Commodities spread 300 July/March, they said.

 

In soybean options trade, Refco Inc. bought 600 April US$5.90 puts, sold 400 November US$5.80 puts and bought 500 May US$5.20 puts.

 

The last day for trade of CBOT March options is Friday.

 

CBOT soy traders noted a French Ministry of Agriculture alert of a suspected bird flu outbreak in a turkey farm with 11,000 turkeys near Lyon. Test results from the farm were expected Friday. If confirmed positive, this would mark the first case of the H5N1 virus on a commercial farm in the European Union.

 

Midday spot U.S. soybean barge basis bids fell 2 cents Thursday, cash sources said.

 

Traders 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.

 

The U.S. Census Bureau reported Thursday that the U.S. January soybean crush totaled 151.492 million bushels, just below the average analyst estimate of 152 million. CBOT traders said the data had little impact on CBOT prices Thursday.

 

U.S. January soyoil stocks totaled 2.477 billion pounds, just below the average analyst estimate of 2.484, but still large enough to pressure prices, traders said. Soymeal stocks totaled 324,402 tonnes, below estimates of 341,700 tonnes.

 

CBOT South American soybean futures also ended lower Thursday. The CBOT May futures settled down 2 cents at US$6.09 1/2 per bushel.

 

Traders noted reports of light soy harvest delays in Brazil's center west due to this week's rains.

 

Two CBOT traders also noted the amount of soybeans involved in a lineup waiting for vessels from the southern port of Paranagua rose to almost 2 million tonnes, up from 1.3 million last year at the same time when freight rates were higher.

 

"That could be due to harvest delays," one trader said.

 

"This has prompted some talk of possible shifting of sales back to the U.S. near term," the other trader said. "But it would be bearish CBOT May and July because once the backup ends, Brazilian soybeans are cheaper than U.S. beans.

 

CBOT traders closely watch Brazilian soy movement and the value of the real at this time of year. Brazilian soy producers have been slow to sell soybeans recently due to the strength of the real versus the dollar.

 

Brazil is forecast by the USDA to overtake the U.S. as the top global soybean exporter this season.

 

 

SOY PRODUCTS

 

CBOT soymeal futures ended lower Thursday, with the nearby five contracts down 50 cents to US$1.10 per tonne.

 

Concerns about a slowdown in poultry consumption amid the spread of a deadly strain of bird flu in Europe remained a pressuring factor, some brokers said.

 

In soymeal trades, funds sold about 2,500 lots, brokers said. Iowa Grain sold 1,000 May, Man Financial and ABN Amro each sold 500 May and Bunge sold 300 May, they said.

 

In spread trade, ABN Amro spread 1,500 March/May.

 

CBOT May oil share ended at 39.57%, and the May crush was at 59 1/2 cents.

 

Soyoil futures closed mixed, with the nearby five CBOT soyoil contracts up 0.01 to down 0.03 cent per pound.

 

In Thursday's soyoil trades, funds bought about 900 lots, brokers said. Calyon Financial bought 400 May; R.J. O'Brien bought 300 May; Tenco Inc. sold 500 May and bought 200 March; and commercial Bunge bought 200 May, brokers said.

 

In spread trade, ABN Amro spread 700 May/March; JP Morgan spread 500 May/March; Produce Grain spread 1,000 March/May; Rand Financial spread 500 March/May; and Fimat spread 500 March/July.