March 8, 2006

 

CBOT Soy Review on Tuesday: Ends lower on currencies, US rains

 

 

CBOT soybeans ended lower on Tuesday on late speculative sales; talk of Brazilian farmer soybean sales amid this week's weaker Brazilian real; dollar strength which bodes poor for U.S. soybean exports; and rains in key U.S. soy growing states Iowa and Illinois, brokers said.

 

"We had a 25-cent break in CBOT soybeans when the real fell 3% beginning Feb. 21," one CBOT soy broker said late Tuesday.

 

Moreover, technical chart patterns suggest CBOT soybeans could be breaking out of their recent trading range to the downside, he added.

 

CBOT May soybeans ended Tuesday down 10 1/2 cents at US$5.90 a bushel, below the 10-day moving average of US$5.94 3/4.

 

CBOT May soymeal closed down US$1.60 at US$174.30 per short tonne and May soyoil settled down 0.48 cent at 24.31 cents per pound.

 

Moreover, analysts in a survey on Tuesday forecast the U.S. Department of Agriculture would boost by 6 million bushels its 2005-06 U.S. soybean ending stocks estimate to a record 561 million bushels in Friday's monthly crop supply and demand report.

 

In Tuesday's CBOT soybean pit trades, speculative commodity funds were net sellers after selling at least 1,300 lots by 12:30 CST, brokers said.

 

The Refco division of Man Financial sold 700 May, ABN Amro sold 500 May, Fortis Grain and Rand Financial each sold 300 May and Citigroup bought 400 May, brokers said.

 

Spread trade was also noted, with Tenco Inc. spreading 600 May/July, Refco spreading 500 July/May and Tenco, R.J. O'Brien and Man Financial each spreading 300 March/May, they noted.

 

There were 815 deliveries posted Tuesday against CBOT March soybeans, with no major stoppers, brokers noted.

 

Soybean contracts registered with the CBOT for delivery purposes as of Monday afternoon fell 142 lots to 3,700 lots.

 

There were 229 deliveries posted Tuesday against CBOT March soyoil. No soymeal deliveries were posted.

 

There were 6,343 soyoil registrations, unchanged from Friday's tally, and 34 soymeal registrations, also unchanged from Friday.

 

Midday U.S. soybean barge basis bids for the first half of March were steady, cash sources said.

 

Meanwhile, ideas of improved U.S. soy growing conditions increasingly weighed on CBOT soybeans, brokers said.

 

Weather forecasts called for light showers across the central and western U.S. Midwest soy belt while light rains were also forecast for both the western and eastern Midwest on Thursday, according to Meteorlogix weather service.

 

Moreover, analysts have begun to question whether NOAA may back away from its previous forecast of a mild La Nina in its monthly forecast due out on Thursday.

 

"While NOAA has said that we are in a mild La Nina, sea surface temperatures in the eastern equatorial Pacific ocean do not support this," an analyst said recently, noting that area's average sea surface temperatures had risen to 0.5 degrees Celsius above normal, up from 0.2 degrees Celsius below normal in January.

 

In Brazil's soybean growing belt, light rains were expected in the northern and the southern portions of the soy belt Wednesday, while heavier rains were expected in the north Thursday through Saturday, Meteorlogix said.

 

Also on Tuesday, the Brazilian Census Bureau, or IBGE, forecast a 2005-06 soybean crop of about 57 million metric tonnes of soy, down 2.5% from January's estimate of 58.5 million tonnes.

 

Brazil's soy harvest was last forecast to be about 20% complete, sources noted.

 

In Argentina, scattered showers were expected Wednesday while dry weather was seen Thursday through Saturday, Meteorlogix said.

 

CBOT South American soybean futures ended lower Tuesday. The CBOT SAS May futures settled down 10 cents at US$6.10 per bushel.

 

 

SOY PRODUCTS

 

CBOT soymeal futures ended lower Tuesday, with the nearby five contracts down US$1.20 to US$1.60 per tonne. Lingering concerns about soymeal demand amid the spread of a deadly strain of bird flu globally continue to weigh on prices, brokers noted.

 

In CBOT soymeal trades, commodity funds sold at least 1,500 lots. Iowa Grain sold 800 May, Fimat sold 300 May and 100 July, Citigroup bought 400 May, and Bunge Grain and ABN Amro each sold 300 May, brokers said.

 

CBOT May oil share ended Tuesday at 41.09%, and the May crush was at 60 3/4 cents.

 

Soyoil futures also closed lower Tuesday, with the nearby five CBOT soyoil contracts down 0.46 cent to 0.50 cent per pound in a lingering setback from last week's 4-1/2-month high.

 

Soyoil had been underpinned by ideas of a possible U.S. soy crush if bird flu cut soymeal demand. Such a move would cut soyoil production amid rising demand for the feedstock for biodiesel production.

 

In Tuesday's CBOT soyoil trades, funds sold at least 3,000 lots. UBS sold 1,200 May, Iowa Grain sold 1,000 May, Tenco Inc. bought 600 May, Prudential and ABN Amro each bought 400 May, brokers said.

 

Commercials were net buyers of CBOT soyoil futures Tuesday, with Bunge Grain and the commercial arm of JP Morgan each buying 400 May, brokers said.

 

In CBOT soyoil spread trade, Produce Grain spread 250 July/March and 200 July/May, brokers said.