March 17, 2006

 

CBOT Soy Review on Thursday: Lower on technicals, bearish fundamentals

 

 

Chicago Board of Trade soybean futures ended lower Thursday after bellwether May fell to a fresh two-month low late of US$5.75 1/2 on technical sales, improved U.S. Midwest spring planting conditions, big South American soy supplies and a slowdown in year-over-year Chinese soy imports during January and February, brokers said.

 

"For once, the fundamental trader had no argument with the technicals," one CBOT soybean broker said.

 

CBOT May soybeans settled down 8 cents at US$5.76 1/4 a bushel after falling to the lowest level since Jan. 20.

 

"The charts look really bearish," one CBOT soy local trader said, but everyone (locals) are short, so how far will it fall now?"

 

CBOT May soymeal futures ended down US$1.90 at US$173.10 per tonne after falling through its 10-day moving average of US$174.80 per tonne.

 

CBOT May soyoil futures closed down 0.12 cent at 23.43 cents per pound after falling through its 200-day moving average of 23.45 cents.

 

In Thursday's CBOT soybean futures pit trade, speculative funds were net sellers, with sell stops noted under US$5.80 in the May contract. ABN Amro sold 1,500 May, Rand Financial sold a net 900 May, Man Financial sold 500 May, and Iowa Grain, Gelber Trading and the Refco Inc. division of Man Financial each sold 300 May, brokers said.

 

In Thursday's soybean spread trade, ADM Investor Services spread 300 September/July and Iowa Grain spread 300 July/May, they noted.

 

Midday U.S. Gulf soybean basis bids were unchanged on Thursday, cash sources said.

 

U.S. weekly soybean export sales data, released early Thursday, were generally neutral, CBOT soy brokers said.

 

The U.S. Department of Agriculture reported Thursday that U.S. weekly soybean export sales totaled 381,400 metric tonnes and new-crop sales totaled 3,000 tonnes.

 

The old-crop net weekly U.S. soybean sales of 381,400 metric tonne were 24% below the previous week and 20% under the prior four-week average. There were major increases for China (310,400 metric tonnes, including 100,000 metric tonnes switched from unknown destinations), the USDA said.

 

Weekly U.S. soymeal export sales totaled 93,700 metric tonnes (old- and new-crop combined) while soyoil sales were 17,500 tonnes.

 

However, reports from China of a 16.3% slowdown in its January-February soybean imports from last year's level caught traders' attention.

 

"It's not going to be positive if Chinese demand slows just as South American supplies pick up," one CBOT broker said.

 

China is the world's largest soybean importer, with the USDA forecasting, in Wednesday's attache report that Chinese soybean imports during 2005-06 of 26.8 million metric tonnes.

 

In comparison, the EU-25 is forecast to import 14.40 million tonnes of soybeans during the same time, according to the USDA.

 

In South America, Brazil is expected to harvest roughly 58.1 million metric tonnes of soybeans, according to Brazil's Agriculture Ministry estimates. The government is due to release a new official estimate on March 20, while the USDA last forecast Brazil's 2005-06 soy crop at 58.5 million metric tonnes.

 

Argentina's Agriculture Secretariat estimated Thursday in its monthly crops report a 2005-06 soy harvest of 39.5 million metric tonnes, below the USDA's latest forecast fo 40.5 million tonnes.

 

In 2004-05 Argentina produced a record 38.3 million tonnes of soy, according to the Secretariat.

 

CBOT South American soybean futures also ended lower Thursday. The CBOT SAS May futures settled down 7 3/4 cents at US$5.94 1/4 per bushel.

 

 

Soy Products

 

CBOT soymeal futures ended lower Thursday, with the nearby five contracts down US$1.80 to US$2.10 per tonne.

 

In CBOT soymeal trades, speculative funds and commercials were net sellers. Bunge Grain sold 400 May, Prudential Financial sold 200 July, Fimat sold 300 May while buying 300 July and the speculative arm of JP Morgan bought 100 May while selling 200 July, brokers said.

 

Soyoil futures also settled weak Thursday, with the nearby five CBOT soyoil contracts down 0.10 cent to 0.16 cent per pound.

 

In Thursday's CBOT soyoil trades, speculative selling outweighed commercial buying. ADM Investor Services bought 500 May and 100 July while Bunge Grain bought 200 July. R.J. O'Brien sold 500 May, Rand Financial and UBS Warburg each sold 300 July and Citigroup bought 400 May and 100 August, brokers said.

 

In soyoil spread trade, ABN Amro spread 200 May/July, they noted.

 

CBOT May oil share ended Thursday at 40.36% and the May crush was at 62 1/4 cents.