March 29, 2006

 

CBOT Soy Review on Tuesday: Mostly up on speculative buying

 

 

Chicago Board of Trade soybeans settled mostly firm Tuesday on light short-covering and speculative buying despite a 2% drop in the Brazilian real, U.S. Midwest rains this week, concerns about the spread of bird flu and positioning before Friday's key U.S. Department of Agriculture reports, brokers said.

 

"Take your choice," said Roy Huckabay, vice president at The Linn Group. "It's a situation where I don't think that it can rally and stay firm because the fundamental outlook is still just too bearish. But that's just another reason - you had people just too short beans."

 

The Commodity Futures Trading Commission reported Friday that non-commercials were net short 29,589 CBOT soybean futures and options combined and net short 18,071 CBOT soymeal futures and options as of Tuesday, March 21.

 

Non-commercials were thought to be net short about 25,300 CBOT soybean futures and net short 14,800 CBOT soymeal futures before Tuesday's CBOT open outcry opening bell, soy traders said.

 

CBOT May soybeans settled up 2 cents at US$5.81 1/2 a bushel, between support at the 10-day moving average of US$5.77 and resistance at the 20-day moving average of US$5.84 3/4

 

In CBOT soybean futures pit trade, commodity funds bought 1,100 contracts by 1:30 p.m. EST, while commercials traded lightly on both sides of the market, brokers said.

 

Refco Inc. bought 500 May, Man Financial bought 300 May, JP Morgan traded 200 May and bought 200 July, Term Commodities bought 100 July and ADM bought 100 July and sold 200 May, they noted.

 

Tuesday's CBOT soybean spread trade was moderate, with the Refco division of Man Financial spreading 500 July/May,k ADM spreading 300 September/July, O'Connor and Co. spreading 200 July/November and Fimat spreading 200 November/August.

 

U.S. midday cash soybean Gulf barge bids for April were unchanged Tuesday, sources said.

 

Meanwhile, Brazilian cash sources noted a pickup in Brazilian farmer sales of soybeans as the Brazilian real fell this week following the resignation Monday of Finance Minister Antonneio Palocci.

 

Brazil, where the soybean harvest is accelerating, is forecast to become the top global soybean exporter this year for the first time, taking the title from the U.S.

 

The USDA last estimated Brazil would produce 58.5 million metric tonnes of soybeans during the 2005-06 marketing year and export 26.07 million metric tonnes.

 

However, Brazilian analysts and government estimates have since forecast a 2005-06 Brazilian soybean crop between 55.3 million metric tonnes and 57.2 million tonnes due to adverse growing conditions.

 

The Brazilian real in early afternoon trade on Tuesday was down 2.03% to BRL2.215 in spot-contract trade on the Brazilian Mercantile and Futures Exchange.

 

CBOT South American soybean futures also ended firm Tuesday. The CBOT SAS May futures settled up 4 cents at US$6.04 1/2.

 

CBOT traders expected positioning to continue this week into Friday's USDA 2006 prospective U.S. spring plantings and quarterly stocks data as of March 1 kept trade muted.

 

Analysts on average expected the USDA to report Friday that U.S. farmers would seed 74.050 million acres to soybeans, up from last year's 72.142 million.

 

March 1 U.S. soybean stocks were expected to be reported at a record 1.678 billion bushels, above last year's 1.381 billion. Estimates ranged from 1.660 billion to 1.703 billion bushels. Still, analysts noted a tendency for the USDA's March 31 quarterly stock estimates to come in below the trade's expectations, and they noted Dow Jones' average analyst plantings estimate was at the high end of pre-report estimates.

 

 

SOY PRODUCTS

 

CBOT soymeal futures ended weak Tuesday on late technical sales after early speculative and commercial buying, brokers said.

 

A pickup in Brazilian soybean sales amid a 2% drop in the real and concerns about the possible slowing of U.S. crush amid the spread of bird flu weigh on soymeal.

 

In particular, traders noted news that India would cull at least 200,000 birds amid flu worries.

 

CBOT May soymeal ends down 40 cents at US$178.40 per short tonne after falling below resistance at its 50-day moving average of US$179.60, while the nearby five CBOT soymeal contracts settled down 40 cents to 60 cents per tonne.

 

In CBOT soymeal trades, funds bought 600 lots by 1:30 p.m. EST, but speculative sales were noted late. Man Financial bought 400 May, Citigroup bought 200 July and O'Connor and Co. bought 200 May, brokers said. Commercial ADM Investor Services bought 300 May and Bunge Grain bought 200 July, they noted.

 

CBOT soymeal spread trade was quiet Tuesday, with Fimat spreading 100 May/July, brokers said.

 

Spot midday interior U.S. cash high-protein soymeal offers were steady to firm Tuesday, with an increase of US$2 per tonne in Cedar Rapids, Iowa, sources said.

 

CBOT soyoil futures settled firm Tuesday, with the nearby five CBOT soyoil contracts up 0.21 cent to 0.26 cent per pound.

 

In Tuesday's CBOT soyoil trades, funds bought 800 contracts by 1330 EST and commercials were net buyers, brokers said.

 

Bunge Grain bought 300 May and 100 July, ADM bough 100 May and 100 July, Calyon Financial bought 400 may, JP Morgan bought 400 May and sold 300 July, and Rand Financial and Tenco Inc. each bought 200 May, brokers said.

 

CBOT May oil share ended Tuesday at 39.10% and the May crush was at 63 cents.