March 16, 2007

 

CBOT Soy Review on Thursday: Closes down but shows underlying strength

 

 

Chicago Board of Trade soybean futures closed lower Thursday but showed underlying strength by holding steady amid late declines in the corn and wheat markets, analysts said.

 

May soybeans closed 3 cents lower at US$7.50 1/2 per bushel, and November soybeans ended down 2 1/4 cents at US$7.90. May soyoil finished 11 points higher at 30.56 cents per pound, and May soymeal closed US$0.90 down at US$217.40 per short tonne.

 

Spillover pressure from other markets, along with light speculative and technical selling, kept prices in negative territory, floor traders said.

 

But there is "something about oilseed complex that the funds still like," said Mike Zuzolo, analyst with Risk Management Commodities Inc. Funds sold an estimated 2,000 soybean contracts but were estimated to be heavier sellers in corn and wheat.

 

There also was some underlying support from a new National Oceanic and Atmospheric Administration report that said neither El Nino nor La Nina are expected to impact climate in the U.S. during April through June, Zuzolo added.

 

"That tells the farmers to plant more corn," Zuzolo said about the forecast. "I think that tells the trader that bean acres are going to continue to go down."

 

U.S. farmers are expected to shift millions of acres of farmland to corn from soybeans this spring to take advantage of high corn prices and sharp demand for ethanol.

 

Floor traders said they were awaiting the release of acreage estimates on Friday from a private analytical firm. Beyond that, the U.S. Department of Agriculture is slated to release its estimates on planting intentions and grain stocks on March 30.

 

Zuzolo said bullishness about soybean acreage loss will probably be factored into the market by the time the USDA report is released.

 

"By the time we get to the acreage report, it'll be a be a 'buy the rumor, sell the fact' kind of thing," he said.

 

The USDA on Thursday reported weekly soybean export sales were 452,600 metric tonnes for the week ended March 8, in line with the 400,000-500,000 tonnes expected by analysts. The sales were in line with expectations and had little impact on trading, a floor trader said.

 

The USDA announced Thursday morning that Mexico and China had each purchased 120,000 metric tonnes of U.S. soybeans for delivery in the 2006-07 marketing year.

 

 

SOY PRODUCTS

 

CBOT soy product futures ended mixed. Soymeal closed lower under spillover pressure from soybeans, while soyoil felt a boost form funds buying an estimated 500 contracts, traders said.

 

There was some early support for soymeal from strong export sales, although the market absorbed the news and moved on, a floor broker said.

 

The USDA said weekly soymeal export sales were 277,000 metric tonnes, a marketing-year high, while soyoil sales were 2,200 tonnes. Analysts had expected soymeal export sales to be in the range of 50,000 to 100,000 tonnes and soyoil sales to be in the range of zero to 10,000 tonnes.

 

In pit trades, Fimat and Citigroup each bought 300 May soyoil, while ABN Amro sold 300 May soyoil.