February 27, 2007

 

CBOT Soy Review on Monday: Ends up; trims gains amid corn weakness

 

 

Chicago Board of Trade soybean futures ended firmer Monday but well off early highs. Speculative buying interest dried up amid weakness in the neighboring corn market, traders and analysts said.

 

March soybeans finished up 1/2 cent at US$7.78 3/4 per bushel, and May soybeans closed up 1/2 cent at US$7.94 1/2 a bushel. The modest gains were off daily highs of US$7.90 for March soybeans and US$8.06 for May soybeans.

 

March soymeal closed US$1.30 lower at US$227.60 per short tonne, while March soyoil finished 32 points higher at 30.71 cents per pound.

 

Nearby soybean futures were solidly firmer in overnight trading, and a round of strong carryover buying helped push prices sharply higher at the start of the day session, floor traders noted. The follow-through buying, however, could not be sustained, they said.

 

Fresh speculative buying also quieted down, despite solid export sales, an analyst added.

 

The U.S. Department of Agriculture reported U.S. weekly export inspections were 30.658 million bushels for the week ended Feb. 22, while analysts' had predicted sales to be 17 million to 40 million bushels.

 

The inspections were slightly lower than a week earlier, when the USDA said 30.794 million bushels were inspected for export. For the marketing year to date, 737.371 million bushels have been inspected for export, compared to 593.998 at this time last marketing year.

 

There was some further support from funds buying an estimated 1,000 contracts, a floor broker said.

 

"Once the round of spec buying was over, we retraced back some," said Chad Henderson, analyst with Prime Agricultural Consultants. "I think the bulls did all they could at the end of the day to make sure it didn't close negative."

 

In pit trades, UBS bought 700 May and sold 1,000 May. Fimat bought 500 May, while RJ O'Brien sold 500 November. Funds bought an estimated 1,000 contracts.

 

FCStonnee spread 900 March/May, and MLP spread 500 May/March.

 

Looking forward, Henderson said lower closes in CBOT corn and wheat could help provide soybeans with a negative tonnee Tuesday.

 

"Today's reversal to a lower close on corn and wheat is probably going to end up weighing on wheat," he said. "Everything gets its direction from corn."

 

Drier weather in Brazil's northern soybean areas and favorable conditions in Argentina's soybean belt also were bearish for prices, analysts noted.

 

In northern Brazil, weekend weather was drier than in recent weeks, which offered some opportunities for harvest, the DTN Meteorlogix weather firm reported. Scattered thunderstorms will occur this week, but not to the extent of earlier this month, the firm said.

 

Argentina's central soybean belt, meanwhile, had a scattered shower pattern, with rainfall up to 1 1/2 inches, during the past weekend, according to the firm. A wet week is in store as rainfall will total up to 2 1/2 inches between Monday and Thursday, Meteorlogix said.

 

The firm said beneficial rain through the major growing areas of central Argentina last week will maintain generally favorable conditions for the developing crop.

 

"After we opened up and there was no follow-through, people asked, 'Why are we here when there's good weather down in South America?' " Henderson said.

 

In other news, index funds increased their long CBOT soybeans futures and options positions by 1,751 lots and their short positions by 497 lots in the week ended Feb. 20, according to the Commodity Futures Trading Commission. Index funds are net long 136,792 CBOT soybeans contracts, the CFTC said.

 

Large non-commercial traders increased their long positions by 1,528 contracts and their shorts by 2,168 contracts, the CFTC reported. They are net long 81,237 contracts.

 

 

SOY PRODUCTS

 

Soyoil futures hit a new contract high with support from fund buying of an estimated 2,500 contracts boosted soyoil futures, traders said. March soyoil trading at a new contract high of 31.10 cents per pound, exceeding the previous high of 30.85.

 

Soyoil also felt spillover support from strength in the outside markets, an analyst added.

 

In soyoil trades, JP Morgan bought 700 July and 400 May and sold 500 March. Tenco bought 600 December, while Man Financial bought 500 May and UBS bought 400 May. Prudential bought 800 May and sold 400 May.

 

Tenco and Iowa Grains each spread 500 May/March, while Term Commodities spread 500 March/May. Iowa Grains also spread 500 July/May.

 

Index funds increased their long CBOT soyoil futures and options positions by just 57 contracts and kept short positions unchanged, the CFTC reported. The index funds are net long 72,860 CBOT soyoil contracts, according to the CFTC.

 

Soymeal, meanwhile, was seen as a follower, floor traders said. Weakness in CBOT corn, along with the late declines in soybeans, pressured soymeal prices, they added.

 

In soymeal trades, JP Morgan bought 900 May and sold 300 May. Tenco sold 700 May, and Fortis sold 600 May. ABN Amro spread 800 May/March.

 

Large non-commercial traders increased long CBOT soymeal futures and options positions by 6,469 lots and cut shorts by 1,665 lots. The non-commercial traders are net long 63,393 CBOT soymeal positions, according to the CFTC.