March 10, 2007

 

CBOT Soy Review on Friday: Ends slightly up; recovers from losses

 

 

Chicago Board of Trade soybean futures ended slightly higher Friday after the government released a new supply and demand report largely considered to be neutral, analysts said.

 

May soybeans settled up 3/4 cent at US$7.59 3/4 per bushel, and November soybeans finished 2 cents higher at US$7.99 1/2.

 

Soy product futures ended mixed. May soymeal closed US$0.70 higher at US$221.80 per short tonne, while May soyoil closed down 1 point at 30.59 cents per pound.

 

The higher close for soybeans came after prices bounced from session lows of US$7.50 for the May contract and US$7.89 1/2 for the November contract. Position-squaring and light fund buying were seen as supportive, traders said.

 

Carryover buying from the overnight pushed soybeans to open higher, although prices then fell back amid a lack of fresh inputs and spillover weakness from the energy markets, traders said.

 

"The crude oil market was sharply lower, and I think that contributed to the weakness in corn and soybeans," said Bill Nelson, assistant vice president with AG Edwards & Sons. "In the absence of other news, I think it kind of fell back to the energy association."

 

In the recovery, funds bought an estimated 1,500 contracts. In pit trades, JP Morgan and UBS each bought 500 May. RJ O'Brien and UBS each sold 300 May. ADM spread 400 July/November.

 

Floor trading was quiet and choppy for much of the day session.

 

The U.S. Department of Agriculture on Friday morning released its March supply and demand report but did not change U.S. soybean, corn or wheat ending stocks from their February estimates. The USDA left U.S. soybean carryout at 595 million bushels, although some analysts had anticipated a small reduction because of strong export sales.

 

Amid expectations for a decrease, some analysts saw the steady carryout estimate as slightly bearish.

 

"I think that some of us were leaning toward a little bit toward a lower number," Nelson said. "We didn't get that."

 

Looking ahead, the balance of the month will be spent with traders positioning for the USDA's March 30 planting intentions and grain stocks reports, analysts said. U.S. farmers are expected to plant more corn, largely at the expense of soybeans, to take advantage of sharp demand for ethanol.

 

"Beans remain tied to corn for price direction between now and the end of the month," an analyst said. "The potential for USDA to report a sharp cut in 2007 soybean planting intentions remains the main supportive factor for beans."

 

Nelson added that, because there was so little substantial change in Friday's USDA report, "the markets this year are really going to be focusing in on any kind of intelligence they feel they can gather" going into the March 30 report. That includes reports about planting progress and weather conditions.

 

The USDA on Friday raised its estimate of the Brazilian soybean crop to 57 million tonnes, up from the February report's estimate of 56 million. The production estimate for Argentina was left unchanged at 44 million.

 

Mostly favorable crop weather in South America and expectations for a big output there are bearish for prices, an analyst said.

 

In South America, weekend weather patterns offer continued favorable trends for crops, according to DTN Meteorlogix. The soybean harvest in northern Brazil will have very few delays due to rainfall, with only isolated thundershowers are on tap for Mato Grosso, Mato Grosso do Sul, Goias and northern Parana, the weather firm reported.

 

Mato Grosso harvest will very likely be more than half-complete by the start of next week, and Parana harvest will likely be more than 25% complete, the firm said. Rio Grande do Sul has not yet begun harvest.

 

Argentina's central crop areas, meanwhile, had thundershowers with up to one inch of rain on Thursday, Meteorlogix reported. Additional showers will occur during the first part of the weekend in soybean areas, which continues a very favorable weather pattern for crops, the firm said.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed as soymeal followed soybeans into positive territory, traders said. Weakness in outside markets, including crude oil, weighed on soyoil, they said.

 

In the USDA report, U.S. soymeal supply and demand was left unchanged this month. Soyoil stocks were reduced due to lower projected imports, the USDA said.

 

Funds pressured prices in the soy complex by selling an estimated 1,000 soymeal contracts and 1,000 soyoil contracts. In pit trades, Iowa Grains bought 600 May soymeal and Man Financial sold 400 May soymeal. Soyoil buyers and sellers were scattered.