March 7, 2007

 

CBOT Soy Review on Tuesday: Extends losses on jitters, corn pressure

 

 

Chicago Board of Trade soybean futures extended their losses Tuesday amid jitters over continued long liquidation and spillover pressure from losses in the neighboring corn market, analysts said.

 

May soybeans closed down 2 3/4 cents at US$7.47 3/4 per bushel, and Nov soybeans ended 1 1/4 cents lower at US$7.86 1/2. It was the lowest close for both contracts since Feb. 1 and the fourth consecutive day session in which prices ended in negative territory.

 

May soymeal finished US$0.80 lower at US$219.70 per short tonne, while May soyoil closed 13 points down at 29.85 cents per pound.

 

Soybean futures traded higher in the overnight electronic session, although follow-through buying was not strong enough to spark a new rally, a CBOT floor trader said. That opened the door for some speculative selling, he added.

 

Lingering nervousness among traders about recent volatility in equity markets kept some traders from establishing long positions, analysts said. Long liquidation has been seen heavy recently and driven prices to the downside, they noted.

 

"I think it's going to take at least another day of the stock indexes showing that, at least in the near term, they're willing to heal and recover to give room for longs to come in," said Tim Hannagan, analyst with Alaron.

 

The CBOT corn market also trended lower and added spillover pressure on soybeans, analysts said. Floor activity was quiet for much of the day session amid an absence of fresh inputs, a CBOT floor broker noted.

 

There was further pressure from fund selling of an estimated 2,000 contracts.

 

In pit trades, Man Financial sold 700 May, and Goldenberg Hehmeyer sold 500 November. ADM sold 300 May and bought 400 May. JP Morgan sold 300 May. UBS spread 1,000 November/July.

 

In other news, Brazil should harvest 56.7 million metric tonnes of soybeans in the 2006-07 season, the National Commodities Supply Corp., or Conab, said Tuesday. The number is lower than all recent private estimates, which have put the crop over 57 million tonnes.

 

In February, Conab said Brazil should harvest around 56.3 million. The number did not increase much in comparison to February because of an overall reduction in planted area, a Conab official said. Conab agronomists also cited excessive rains in north Mato Grosso that caused some losses in towns like Lucas do Rio Verde.

 

Brazil's soybean-producing states have seen some scattered thundershowers with temperatures into the upper 90s Fahrenheit, DTN Meteorlogix reported. The northern states of Mato Grosso and Mato Grosso do Sul are about half done with soy harvest, and rainfall is not expected to be enough to cause problems, the weather firm said.

 

In the south of Brazil, any rainfall is welcomed for late filling soybeans, but might cause delays in harvest fieldwork, Meteorlogix said.

 

In Argentina, prospects for rain over the next couple days are good, with up to 1 1/2 inches possible, the firm reported.

 

 

SOY PRODUCTS

 

CBOT soy product futures closed lower under pressure from losses in the soybeans and corn markets, traders said. Fund selling of an estimated 1,000 soymeal and 1,000 soyoil contracts also weighed on the market.

 

Soymeal felt some support from commercial buying, floor traders added. Commercials bought an estimated 2,000 contracts, they said.

 

In pit trades, Tenco bought 600 July soymeal, while Fimat sold 400 May soymeal. JP Morgan and Fimat each bought 500 May soyoil. Fimat sold 700 May soyoil.