March 18, 2006

 

CBOT Soy Review on Friday: Up marginally in choppy, uneventful trade

 

 

May soybean futures settled slightly higher after a session in which traders didn't want to take strong positions on a light news day and ahead of the weekend. Speculative accounts were on both sides of the market, while commercials were mostly on the sell side, but in light volume.

 

May beans settled 1/4 cent higher at US$5.76 1/2, May soymeal gained 70 cents to US$173.80 and May oil lost 19 points to 23.24 cents.

 

"Beans were choppy and narrowly mixed while the best trade was in the products, largely on the meal/oil spreads," said independent agricultural analyst John Kleist.

 

"Even though we made new swing lows yesterday (Thursday), the funds showed no stomach to press the short side again today ahead of the weekend," he said.

 

The upside was limited by prospects for further precipitation in the Midwest this weekend and another weather system expected to affect the region next week.

 

May soybeans on Friday touched a US$5.75 low, the weakest price since Jan. 19 when it hit US$5.74 a bushel.

 

Nearby technical support is uncovered at US$5.72 1/2, then US$5.66 1/4 and US$5.59 1/2. Resistance is met at US$5.79 1/2, US$5.86, US$5.92 3/4 and US$5.96.

 

Concerns over the spread of bird flu around the world and the decline in soymeal for poultry feed also put a lid on upside attempts, sources said.

 

Israel ordered tens of thousands of turkeys destroyed Friday as officials there awaited test results on whether the country has seen its first outbreak of the deadly H5N1 strain of avian flu. Sweden confirmed it has another case of the H5 type bird flu, though officials were not certain yet if it was the H5N1 strain.

 

India is struggling to contain an outbreak of bird flu as the latest outbreak has affected small backyard farms. The country's first outbreak was the H5N1 strain, which was discovered in large poultry farms. Officials aren't sure if the two outbreaks are related.

 

Meanwhile, soybean prices in China's major growing regions continued to fall this week, as farmers sell part of their stocks ahead of the spring planting season. Crushers obliged the producers by buying up the soybeans.

 

China has authorized imports of genetically modified soybeans from Brazil for five years, following talks aimed at extending the GMO certification period to five years from one year.

 

Citigroup bought a net 700 May soybeans, Fimat bought 200 May and Tenco bought 100 May. CIS sold 500 May, Man Financial sold 400 May, UBS and ADM each sold 300 May, while Bunge, Calyon Financial and R.J. O'Brien each sold 200 May.

 

Funds sold an estimated net 500 soybean contracts.

 

 

SOY PRODUCTS

 

The products closed mixed, with fund buying propping up meal and fund sales pressuring oil amid spreading activity.

 

"There was some light attention in buying meal, after the funds sold meal yesterday, and we're still correcting the oil/meal spreads that got out of whack coming into this week," Kleist said.

 

Funds bought an estimated 1,600 meal contracts.

 

Fortis bought 300 May, Man Financial bought 400 July, R.J. O'Brien bought 200 May and Bunge bought 300 July. Sellers were light and scattered.

 

Funds sold an estimated 700 soyoil contracts.

 

Kottke, Rand Financial and O'Connor each sold 200 May. Term Commodities bought 400 May and other buyers were scattered.