March 15, 2007

 

CBOT Soy Review on Wednesday: Ends down; late short covering trims losses

 

 

Chicago Board of Trade soybean futures finished lower Wednesday but well off session lows as short-covering and a late bounce in the neighboring corn market trimmed losses, analysts and traders said.

 

May soybeans closed 2 cents lower at US$7.53 1/2 per bushel, and November soybeans ended 2 1/4 cents lower at US$7.92 1/4. May soymeal closed down US$2.50 at US$218.30 per short tonne, and May soyoil ended down 2 points at 30.45 cents per pound.

 

The session low for the May soybeans contract was US$7.46, and the session low for the November contract was US$7.84 1/2.

 

Losses in neighboring and outside markets pressured soybeans during much of the day session, said Jerry Gidel, an analyst at North American Risk Management Services in Chicago. In particular, the action in the CBOT corn market was "really having as much impact as anything else," he said.

 

Corn trimmed its losses late in the day session and sparked a similar move in soybeans, a CBOT floor trader said. There was short covering after the earlier declines but not many new buyers, he said.

 

Fund selling of an estimated 3,000 contracts further weighed on soybeans during the day session. In pit trades, JP Morgan and Rand Financial each bought 400 May, while UBS bought 700 May. Kottke sold 500 November.

 

The technical picture for soybeans also looked weak, analysts added.

 

Before the market trimmed its declines, Gidel said the technicals had inspired "kind of a sit-back scenario" for some traders. People were "just sitting back and watching the markets," he said.

 

Looking ahead, Gidel said soybeans may act sluggish in the near term as traders realize that beans won't see a one-to-one decline in acreage while corn plantings expand.

 

U.S. farmers are expected to plant more corn this spring, largely at the expense of soybeans, to take advantage of high corn prices and sharp demand for ethanol. And analysts have said that soybean futures have been trying to keep pace with corn in an attempt to hold on to some acres.

 

"I think there's a lot more attitude that we're going to find a bit more beans in these areas that were not going to be corn in the first place," Gidel said.

 

On Thursday, the U.S. Department of Agriculture will release weekly soybean sales figures for the week ended March 8. Analysts surveyed by Dow Jones Newswires estimated sales would range from 300,000 to 500,000 metric tonnes.

 

The first-ever discovery of Asian soybean rust in Iowa, meanwhile, failed to inspire bullish behavior Wednesday because the fungus was found on old-crop soybeans and there is no guarantee it will hit the new crop, floor traders and analysts said.

 

Officials in Iowa are conducting additional tests on crop residue drawn from the infected soybeans, fearing that the bin may still contain live spores capable of causing additional immediate infections.

 

In other news, Brazil's 2006-07 soy crop is 51% sold as of March 13, agribusiness consulting firm AgRural said Wednesday. Last month, some 46% of Brazil's soy crop had been sold.

 

Last year at this time, Brazil sold just 25% of the 2005-06 crop because of low local commodity prices.

 

 

SOY PRODUCTS

 

CBOT soy product futures closed lower with soybeans on fund selling, traders said. Funds sold an estimated 2,000 soymeal contracts and 2,000 soyoil contracts.

 

Weaker grain prices and outside market losses also kept the products on the defensive, a floor trader said. A late bounce in soybeans and gains in crude oil helped prices come off their lows, he added.

 

In soymeal pit trades, Fimat sold 800 May, while Iowa Grains sold 700 May. JP Morgan bought 500 May. In soyoil pit trades, JP Morgan sold 1,200 May, and Fimat sold 500 May. Shatkin-Arbor bought 400 May soyoil.