March 15, 2008

 

CBOT Soy Review on Friday: Ends limit down on profit-taking, weak soyoil

 

 

Chicago Board of Trade soybean futures ended sharply lower Friday, with some contracts closing limit down on profit-taking and pressure from a hard fall in soyoil, traders said.

 

May soybeans closed limit down, 50 cents lower, at US$13.52 3/4 per bushel, and November soybeans fell 41 1/2 cents at US$12.79. May soyoil ended limit down, or 200 points lower, at 60.56 cents per pound. May soymeal ended down US$12.20 at US$343.80 per short tonne.

 

Much of the pullback in the soy complex started with weakness in soyoil, traders said. Interest in trading soyoil was much greater than interest in trading soybeans, they said.

 

Profit-taking also was a feature amid worries about the economy, analysts said. U.S. equities tanked after the Federal Reserve approved an arrangement to provide emergency funds to Bear Stearns through JPMorgan Chase & Co. (JPM).

 

Bear Stearns is more involved with equities than commodities, but the investment bank's trouble is ""certainly is something that has some sentimental impact" on commodities, an analyst said.

 

Traders also wanted to book profits ahead of the weekend, said Dale Durchholz, analyst for AgriVisor. Commodity funds sold an estimated 3,000 contracts.

 

"It's a Friday," Durchholz said. "I think that's probably playing pretty big."

 

Private analytical firm Informa Economics estimated 2008-09 U.S. soybean planted acreage at 71.3 million, up from the 68.97 million acres it estimated in January. The increase was seen as bearish, an analyst said. Soybean planted acreage in 2007 was 63.6 million acres, according to the U.S. Department of Agriculture.

 

Weak cash prices were another bearish influence, traders said. It is typical for basis levels to drop at this time of year as South America's crop is getting ready to come online.

 

"From the cash side... soybeans and maybe wheat, in particular, you just don't have people really willing to stand in there and buy this stuff," an analyst said.

 

In the primary crop areas of South America, harvest conditions over Parana and Mato Grosso Do Sul, Brazil should improve during the coming days as rains shift north and then weaken, DTN Meteorlogix said. A few harvest delays are in store for Mato Grosso and Goias, the private weather firm said.

 

 

 

SOY PRODUCTS

 

CBOT soy product futures closed sharply lower, with soyoil ending limit down on profit-taking and a slowdown in demand, analysts said. Demand for soyoil, particularly from China, seems to have dried up amid high prices, Durchholz said.

 

"You're up in rarified air," Durchholz said "If there's nobody to stand in there and buy it, you have a vacuum."

 

Commodity funds sold an estimated 3,000 soyoil contracts and 2,000 soymeal contracts. In soymeal pit trades, Fortis sold 500 July.

 

In soyoil pit trades, UBS sold 700 May, while Newedge USA sold 500 May and bought 300 May.