March 9, 2006

 

CBOT Soy Review on Wednesday: Weak on fund sales, US rain, outside Mkts

 

 

Chicago Board of Trade soybeans and soy products closed lower Wednesday on speculative fund sales, weakness in outside commodity markets including metals and energies, and good U.S. Midwest rains ahead of spring plantings, brokers said.

 

"Some key commodity indices are at multi-month lows," one CBOT source said. "There is concern that index funds may begin to make redemptions."

 

Pressure also stemmed from lingering bird flu concerns and estimates for a boost in the U.S. Department of Agriculture's already record U.S. 2005-06 soy ending stocks estimate on Friday, they added.

 

Analysts surveyed by Dow Jones Newswires, on average, expected the government to forecast U.S. soybean supplies at the end of the 2005-06 marketing year at 562 million bushels, up 7 million bushels from its February estimate of 555 million bushels.

 

The analysts' estimates ranged from 555 million to 584 million bushels.

 

CBOT May soybeans ended Wednesday down 6 cents at US$5.84 a bushel after hitting a one-week low of US$5.83 1/4.

 

CBOT May soymeal closed down 90 cents at US$173.40 per short tonne. May soyoil settled down 0.39 cent at 23.92 cents per pound.

 

In Wednesday's CBOT soybean pit trades, funds sold at least 4,500 contracts, brokers said.

 

O'Connor and Co. sold 1,000 May; Fimat Futures sold 600 May; and ABN Amro, Calyon Financial, Citigroup, Iowa Grain and the Refco division of Man Financial each sold 500 May, brokers added.

 

ADM Investor Services, JP Morgan and Tenco Inc. each bought 400 May, while Bunge Grain bought 300 May, brokers said.

 

In soybean spread trade, Tenco Inc. and Citigroup each spread 800 May/July and ABN Amro spread 400 May/July, they noted.

 

There were 863 deliveries posted Wednesday against CBOT March soybeans, with a customer of Dowd Wescott stopping 651 lots, brokers noted.

 

Soybean contracts registered with the CBOT for delivery purposes as of Tuesday afternoon rose 138 lots to 3,838 lots.

 

There were 386 deliveries posted Wednesday against CBOT March soyoil, with a customer of Dowd Wescott stopping 175 lots. No soymeal deliveries were posted.

 

There were 6,413 soyoil registrations, up 70 lots from Monday's tally, and 34 soymeal registrations, unchanged from Monday's total.

 

Midday U.S. soybean barge basis bids for the first half of March rose 2 cents, cash sources said.

 

Ideas that rains had improved U.S. soil conditions ahead of the key U.S. planting season also weighed on CBOT soy futures Wednesday, brokers said.

 

The USDA is scheduled to release its 2006 intentions for U.S. spring-planted crops and its March 1 quarterly soybean stocks data on March 31.

 

The USDA preliminarily forecast at its annual Outlook Forum in mid-February that U.S. soybean plantings would rise to 74 million acres from last year's 72.142 million acres.

 

Traders have been anticipating an increase in U.S. soybean plantings at the expense of corn because of this winter's high natural gas prices, a feedstock for fertilizer needed to grow corn, and due to the ratio of CBOT soy prices versus corn.

 

Weather forecasts called for scattered showers through Thursday across the U.S. Midwest soy belt, only light showers Friday and rains during the weekend.

 

Traders also continued to eye soy harvest weather forecasts for Brazil, the second-largest global soybean producer, which is in the midst of its autumn harvest.

 

The Brazilian Vegetable Oils Industry Association, or Abiove, revised its 2005-06 soy crop estimate up 500,000 metric tonnes to 57.6 million tonnes on Wednesday, mostly due to good crop conditions in Rio Grande do Sul. Abiove's previous estimate of 57.1 million tonnes was released in December.

 

CBOT South American soybean futures ended lower Wednesday. The CBOT SAS May futures settled down 6 cents at US$6.04 per bushel.

 

 

SOY PRODUCTS

 

CBOT soymeal futures ended weaker Wednesday, with the nearby five contracts down 70 cents to 90 cents 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, funds sold 1,400 contracts, brokers said. Man Financial sold 400 May, while Prudential Financial and R.J. O'Brien each sold 300 May, they noted. Bunge Grain sold a net 100 May.

 

Spread soymeal trade was muted at the CBOT Wednesday.

 

CBOT May oil share ended Wednesday at 40.80%, and the May crush was at 60 1/2 cents.

 

Soyoil futures also closed lower Wednesday despite commercial buying, with the nearby five CBOT soyoil contracts down 0.32 cent to 0.39 cent per pound in a continued setback from last week's 4 1/2-month high.

 

In Wednesday's CBOT soyoil trades, funds sold at least 1,600 lots. Iowa Grain sold 800 May, Cargill bought 1,000 May, Bunge bought 600 May and Tenco Inc. bought 400 May, brokers said.

 

In CBOT soyoil spread trade, Produce Grain and Calyon Financial each spread 600 July/May while Prudential Financial spread 600 May/July, they noted.