February 24, 2007

 

CBOT Soy Review on Friday: Ends lower on fund selling, profit taking

 

 

Chicago Board of Trade soybean futures closed lower Friday as fund selling and profit-taking weighed on prices, floor traders said.

 

March soybeans ended down 5 1/2 cents at US$7.78 1/4 per bushel, while May soybeans finished 6 1/2 cents lower at US$7.94. March soyoil closed up 7 points at 30.39 cents per pound, and March soymeal ended US$2.50 down at US$228.90 per short tonne.

 

The losses came after soybeans set new contract highs in a string of recent trading sessions, traders noted. The market was in an overbought condition and due for a correction, they said.

 

Funds also sold an estimated 5,000 contracts, a turnaround from fund buying that supported gains earlier in the week, a floor trader added.

 

In pit trades, Rand Financial sold 1,300 May, and RJ O'Brien sold 400 May. Fimat bought 700 May and ADM bought 400 May. RJ O'Brien spread 800 March/May, and Prudential spread 400 March/May.

 

Trading activity was subdued and choppy during much the day session, and some early support was seen from commercials buying an estimated 1,000 contracts, a floor broker said.

 

U.S. weekly export sales figures released Friday morning also were stronger than expected, analysts noted.

 

The U.S. Department of Agriculture reported soybean export sales for the week ended Feb. 15 totaled 675,300 metric tonnes, 81% above the previous week and 12% above the prior four-week average. Analysts had predicted sales would be 300,000 to 600,000 tonnes.

 

The top buyers were China, which took 250,300 tonnes, and Indonesia, which bought 129,000 tonnes.

 

In related news, export basis bids for U.S. soybeans plunged Friday, as improving cash prices and weather conditions permitted greater numbers of bean-laden river barges from winter-weary interior terminals to begin reaching New Orleans-area ports, industry members said.

 

"This isn't hard to justify, as it would be expected that increased supplies from South America's harvest would shut down the export demand for U.S. soybeans and that the sharply higher soybean futures this week would attract increased farmer and elevator selling to fill up the pipeline," said an Indiana grain merchandiser located on the Ohio River.

 

In South America, it looks as though northern soybean areas of Brazil will dry out over the weekend after seeing persistent rainfall recently, an analyst noted. That could allow locals to make progress on the early harvest, which is bearish for futures prices, he said.

 

The DTN Meteorlogix forecast calls for a pattern of drier weather in northern Brazil through the start of next week.

 

"Heavy rain and harvest delays have already brought on some crop loss," the weather firm said. "Reports from northern Mato Grosso indicate that possibly 20% of the crop has been lost due to heavy rain and crop deterioration."

 

Looking ahead, soybean prices will likely remain strong amid expectations that U.S. farmers will plant fewer soybean acres this spring, an analyst said. Prices may still correct a bit more after recent gains, but nobody wants to be short going into spring planting, he said.

 

A new planting intentions survey conducted by Doane Advisory Services showed U.S. farmers intend to plant 14.7% more corn in 2007 than was seeded the previous year, while soybean planted area will decline 12.5%, Doane said.

 

If the results of the survey, which was conducted by mail from Jan. 19 to Feb. 9, are extrapolated to national estimates, Doane said total U.S. corn acreage would climb to 89.8 million acres, up from 78.3 million in 2006. Total soybean acres would fall to 66.1 million, down from 75.7 million.

 

Total acreage among survey participants is expected to rise 1.9% from last year, according to Doane.

 

 

SOY PRODUCTS

 

CBOT soy product futures ended mixed as soyoil trailed the price movements in crude oil futures, analysts said.

 

Soymeal ended lower under pressure from profit taking and funds selling an estimated 1,000 contracts, a floor broker said. Soymeal was in an overbought condition after recent gains and was due for a correction, he added.

 

The losses in soymeal came despite strong U.S. weekly export sales, traders said.

 

The USDA reported soymeal sales were 209,900 tonnes, while analysts' had estimated sales would be 75,000 to 150,000 tonnes. The weekly soymeal sales were 23% above the previous week and 68% over the prior four-week average.

 

The USDA said soyoil sales were 1,800 tonnes, within estimates of zero to 10,000 tonnes.

 

In pit trades, Rand Financial spread 500 March/May soymeal and 500 March/May soyoil.