March 2, 2007

 

CBOT Soy Review on Thursday: Closes sharply lower on long liquidation

 

 

Chicago Board of Trade soybean futures skidded lower Thursday under pressure from heavy long fund liquidation and a bearish technical picture, analysts and traders said.

 

May soybeans closed down 25 1/2 cents at US$7.62. It was the contract's lowest close since Feb. 12.

 

May soyoil closed down 75 points at 30.01 cents per pound, while May soymeal ended US$5.10 lower at US$225.60 per short tonne.

 

Long liquidation weighed on prices throughout most of the day session, floor traders said. Funds sold an estimated 12,000 contracts.

 

The technical picture for soybeans also is negative and suffered more damage from the losses, a trader added.

 

"The chart looks bearish right now," said Eli Tesfaye, lead trader for Crown Futures Crop in Fairfield, Iowa.

 

Some early pressure came on the market from overnight losses, a CBOT floor broker said. Weakness in equities markets was negative for the grains, he added.

 

In pit trades, UBS sold 3,600 July and 1,200 May and bought 1,200 May. RJ O'Brien sold 1,500 May. Citigroup and Fimat each sold 600 May. Fortis, Goldenberg Hehmeyer and Iowa Grains each sold 500 May.

 

Term Commodities bought 3,500 May, and Bunge bought 2,000 May. ADM bought 500 May, and JP Morgan bought 500 July. Citigroup spread 800 November/May.

 

In other news, the U.S. Department of Agriculture kicked off its 2007 Agricultural Outlook Forum Thursday, but no surprising data has been released yet, a veteran CBOT floor analyst said. Some market participants had been expecting to see some bullish new acreage estimates and disappointment may have inspired some selling, he noted.

 

At the forum, USDA Chief Economist Keith Collins said planted acreage for U.S. soybeans is seen falling this year as farmers sow more corn instead. Strong demand for ethanol is pushing up corn prices and leading farmers to plant more corn at the expense of other row crops.

 

"I think the trade knows there will be a shift from beans to corn," Tesfaye said.

 

Collins said 2007-08 soybean planted acreage is seen at 70.5 million acres, down slightly from the 71 million acres the USDA forecast on Feb. 14 in its long-term baseline projections. Soybean area in 2006-07 was 75.6 million acres, according to the USDA.

 

Collins also said the reduction in soybean planted acreage will eventually lead to lower production and help to reduce record-high soybean stocks. Ending stocks in 2006-07 were pegged at 565 million bushels, but for 2007-08, the USDA said in its baseline report ending stocks are estimated at 355 million bushels.

 

 

SOY PRODUCTS

 

CBOT soy product futures finished deep in negative territory amid spillover pressure from the weakness in soybeans, traders said. Fund selling of an estimated 2,000 soymeal contracts and 2,000 soyoil contracts further pressed on prices, they added.

 

In soymeal pit trades, Fimat sold 600 May and bought 500 May. Calyon sold 400 May, while Tenco bought 500 July.

 

In soyoil pit trades, Man Financial sold 700 May. Fimat bought 2,000 May, and JP Morgan bought 1,500 May. Tenco bought 500 May, and Citigroup bought 400 May.