March 11, 2006

 

CBOT Soy Review on Friday: Mostly up on speculative buys despite USDA

 

 

Chicago Board of Trade soybeans and products ended mostly firm Friday on speculative buying after technical support held in bellwether May soybeans at US$5.79, near the low end of a months-long trading range, brokers said.

 

Friday's speculative-led rally bucked slightly bearish U.S. Department of Agriculture crop data, improved U.S. soy plantings prospects after good U.S. Midwest rains this week and a building South American soy harvest, they noted.

 

CBOT May soybeans closed up 1 1/2 cents at US$5.89 1/4 a bushel after setting a six-week low of US$5.79 per bushel.

 

CBOT May soymeal ended up 40 cents at US$174.30 per short tonne. May soyoil settled up 0.09 cent at 24.16 cents per pound.

 

In Friday's CBOT soybean pit trades, speculative commodity funds bought at least 5,000 contracts, led by JP Morgan's purchase of 4,000 July, brokers said.

 

R.J. O'Brien bought 800 May, ABN Amro bought 600 May and sold 200 March, Man Financial sold 600 May and DT Trading bought 400 May, brokers said.

 

In soybean spread trade, Man Financial spread 300 August/November, Citigroup spread 200 July/November and ABN Amro spread 200 November/May, they noted.

 

In Friday's monthly crop report, the USDA raised its forecast for 2005-06 U.S. soybean ending stocks by 10 million bushels to a record 565 million bushels after lowering its U.S. soybean export forecast to 900 million bushels from its February forecast of 910 million.

 

The record U.S. soybean carryout is 536 million bushels, set in 1985-86. The U.S. marketing year for soybeans runs Sept. 1 through Aug. 31.

 

The USDA also raised its forecast for 2005-06 global soybean ending stocks to 54.42 million metric tonnes after raising its forecast for Chinese soybean production to 18.3 million metric tonnes from its February prediction of 17 million tonnes.

 

China is the top buyer of U.S. soybeans, hence its supply and demand data are closely watched.

 

The USDA did not alter its forecasts for 2005-06 Brazilian and Argentine soybean production, leaving those numbers at 58.5 million tonnes and 40.5 million tonnes, respectively.

 

In Friday's CBOT soybean delivery news, there were 792 deliveries posted against CBOT March soybeans, with a customer of Dowd Wescott stopping 266 lots, brokers noted.

 

CBOT soybean registrations fell late Thursday to 3,836 lots from the previous day's figure of 3,840 contracts.

 

There were 284 deliveries posted Friday against CBOT March soyoil, with a customer of Banc of America stopping 224 lots. No soymeal deliveries were posted. CBOT soyoil registrations unchanged at 6,413 lots and soymeal registrations were unchanged at 34 lots.

 

Midday spot U.S. soybean barge basis bids fell 5 cents, cash sources said.

 

U.S. Midwest weather forecasts called for scattered rains Saturday, some clearing in the western belt Sunday, and thunderstorms in the east on Tuesday.

 

Informa Economics forecast Friday 2006 U.S. soybean seedings at 75.222 million acres. The forecast precede the USDA's scheduled release on March 31 of its first U.S. 2006 corn and soybean plantings forecast.

 

Next week, the National Oilseed Processors Association, or NOPA, is expected to report Tuesday that its members' February soybean crush totaled 130.25 million bushels, down from the February 2005 figure of 131.1 million bushels and the January 2006 soy crush of 145.6 million bushels, analysts said Friday.

 

NOPA members' soyoil stocks in February are expected to rise to 2.215 billion pounds from the 2.056 billion pounds reported for January.

 

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

 

Roughly 25% of Brazil's 2005-06 soy crop has been harvested as of Wednesday, private brokerage firm Cerealpar Corretora de Cereais of Parana state told Dow Jones Newswires on Friday.

 

Cerealpar lowered its 2005-06 crop estimate to 57 million tonnes Thursday, down from 57.6 million tonnes forecast in October.

 

Moreover, traders eyed strength in Brazil's real Friday for signs of soy farmers' marketing interest. The real closed at BRL2.138 per dollar in spot contract trading on the Brazilian Mercantile and Futures Exchange, strengthening from Thursday's close of BRL2.160. A stronger real this year has limited Brazilian farmer soy sales.

 

CBOT South American soybean futures ended mixed Friday. The CBOT SAS May futures settled down 2 cents at US$6.06 per bushel.

 

 

SOY PRODUCTS

 

CBOT soymeal futures ended mostly higher Friday, with the nearby five contracts down 10 cents to up 40 cents per tonne.

 

The USDA on Friday boosted its 2005-06 U.S. soymeal exports estimate by 200,000 tonnes and reduced its U.S. domestic soymeal usage estimate by the same, leaving its 2005-06 U.S. soymeal ending stocks forecast unchanged at 250,000 tonnes.

 

Light speculative selling and lingering concerns about soymeal demand amid the spread of a deadly strain of bird flu globally limited gains, brokers noted.

 

In CBOT soymeal trades, O'Connor and Co. sold 500 May soymeal while buying 800 May soyoil; Fimat bought a net 200 May soymeal, Bunge Grain traded 200 May and Man Financial sold 300 July soymeal while buying 400 May soyoil.

 

CBOT May oil share ended Friday at 40.94%, and the May crush was at 60 cents.

 

Soyoil futures settled firm Friday, with the nearby five CBOT soyoil contracts up 0.09 cent to 0.15 cent per pound.

 

The gains followed early weak trade after the USDA boosted in its 2005-06 U.S. soyoil ending stocks estimate to 2.679 billion pounds from last month's 2.454 billion.

 

Traders and analysts noted CBOT soyoil has remained firm recently on ideas of a possible reduced U.S. soybean crush if bird flu diminishes U.S. soymeal demand and ongoing talk about the ramping up of U.S. biodiesel production. However, they noted soyoil futures were nearing a critical technical support area.

 

"It's the moment of truth for the biodiesel people," says James Barnett, analyst at Man Global Research. "Another 20-30 cent (points) in soyoil will be a key area."

 

In Friday's CBOT soyoil trades, funds bought about 1,700 lots, led by O'Connor's purchase of 800 May soyoil as it sold soymeal. Bunge Grain bought a net 400 May soyoil while Term Commodities sold 400 May, Fimat sold a net 200 May and Tenco Inc. sold a net 300 May, brokers said.

 

In CBOT soyoil spread trade, Term Commodities spread 300 May/July, Calyon Financial spread 500 July/May and Tenco Inc. spread 200 May/July, they said.