March 21, 2006

 

CBOT Soy Review on Monday: Speculative sales pressure beans, oil

 

 

Speculative sales pressured soy complex futures at the Chicago Board of Trade Monday, thwarting an early rally attempt, as the market was led down by losses in soyoil.

 

Weekly export inspections at the low end of estimates and beneficial moisture moving across the Midwest pressured the market, sources said.

 

Most active May soybeans fell 4 cents to US$5.72 1/2, after hitting a 3 1/2-month low of US$5.71 1/4 in late trade. It was also May's lowest close since Dec. 7, 2005.

 

May soymeal settled 5 cents lower at US$173.30 a short tonne and May soyoil lost 33 points to 22.91 cents a pound.

 

"The rally is harder to explain than the sell-off," said Anne Frick, oilseed analyst at Prudential Financial in New York.

 

The market opened higher on overnight gains, which may have been prompted by heavy rains in Brazil's Mato Grosso state that are seen delaying the harvest. However, some soybeans have already been picked from that state, which "called into question the early rally," Frick said.

 

Showers in Brazil were also seen easing stress on late filling soybeans and should help with pod filling, DTN Meteorlogix said.

 

Brazil's National Commodities Supply Corp., or Conab, estimated the country's soybean production at 57.2 million metric tonnes, down 1.7% from its projection of 58.17 million tonnes in January.

 

The Conab estimate was higher than some projections, however, and had a bearish effect on the market.

 

"It was down from their previous estimate, but it was expected to be down and it was also higher than some of the recent estimates that I've heard. So I think the news was bearish after the opening and that's probably what gave us our sell-off," Frick said.

 

Improved soil moisture conditions across the U.S. Midwest as a winter weather system moves through Nebraska and parts of Iowa and Missouri on Monday contributed to the bearish atmosphere in the trading pits.

 

In other news, soybean export inspections totaled 17 million bushels, down from 30 million the previous week and at the low end of industry estimates looking for 15 million to 27 million.

 

Meanwhile, farmers harvested 3.9% of Argentina's soybean crop by Saturday, the Buenos Aires Cereals Exchange said. So far, farmers have harvested 1.29 million tonnes of 2005-06 soybeans. Last year, farmers produced 38.85 million tonnes.

 

Argentina's soybean crush totaled 2.371 million tonnes in January, up 19.4% from 1.986 million in January 2005, data from the Agriculture Secretariat showed.

 

In soybeans, Tenco sold 500 July; Calyon Financial and J.P. Morgan each sold 400 May; Rand Financial sold 500 May; and Citigroup Global Markets sold 200 May.

 

R.J. O'Brien bought a net 300 May; Refco and Shatkin Arbor each bought 300 May; and Tenco, O'Connor, Merrill Lynch, Fimat, FCStonnee and ADM each bought 200 May.

 

Funds were listed as even buyers and sellers of soybeans, though the estimate didn't include the late activity.

 

 

SOY PRODUCTS

 

Soy product markets fell, led by the losses in soyoil. Soyoil was pressured by lower Malaysian crude palm oil futures overnight, a weak close on Friday and a gap-lower open Monday, Frick said.

 

In addition, the latest Commitments of Traders Report showed funds were heavily net long the soyoil market, which contributed to the sell-off. Funds added 4,465 positions to total 46,449 positions in the week to March 14, the Commodity Futures Trading Commission said.

 

Funds sold an estimated 2,700 soyoil contracts. Citigroup sold 1,000 May; Man Financial sold 700 May; ADM sold a net 300 May; Calyon Financial sold 300 May; and O'Connor sold 200 May.

 

Tenco bought a net 300 May soyoil, while CIS bought 200 May.

 

May soyoil traded to a one-month low of 22.79 cents and also posted its weakest close since the contract finished at 22.67 on Feb. 15.

 

Soymeal followed the weakness in soybeans, though its losses were limited by meal/oil spreading, sources said.

 

R.J. O'Brien bought 300 May, while Rand Financial, Man Financial, CIS and Calyon Financial each bought 200 May.

 

Fimat and ADM each sold 300 May, while Citigroup sold 200 May.