March 31, 2007

 

CBOT Soy Review on Friday: Lower; influenced by limit-down corn

 

 

Chicago Board of Trade soybean futures settled lower Friday, backpedaling on spillover weakness from a limit-down plunge in the neighboring corn futures market.

 

May soybeans ended 17 cents lower at US$7.61 1/4, and November soybeans finished 15 cents lower at US$8.05. May soymeal settled US$6.80 lower at US$211.80 per short tonne. May soyoil ended 49 points lower at 32.48 cents a pound.

 

The defensive influence of corn's stumble produced a "me too mentality" with futures succumbing to speculative fund selling in unison with corn, said Dan Basse, president AgResource Co. in Chicago.

 

The inability of the funds to sell corn at limit-down levels brought selling into soybeans, as participants attempted to offset losses in corn despite supportive acreage estimates, analysts said.

 

However, the market's slide was seen as only a healthy correction, as bullish longer-range fundamentals remain intact, Basse added.

 

Active contract's ability to settle above the key 50-day moving averages and the unwillingness of traders to press May prices below psychological support at the US$7.50 level provided confidence of future stability in the market, analysts said.

 

Underlying consumptive end-user buying, and outlooks for tighter new-crop supplies based on acreage and rising global oilseed demand were supportive features that kept a floor beneath the market, a CBOT floor analyst said.

 

Nevertheless, the influence of corn was too much to overcome, with traders saying corn traded synthetically in the options market between US$3.61 to US$3.63, with the pool of orders on the electronic platform at limit-down level in the May contract seen at 47,463 lots. CBOT May corn settled at US$3.74 1/2.

 

Meanwhile, the U.S. Department of Agriculture forecast Friday that U.S. farmers would plant 67.140 million acres of soybeans this year, an 11% decrease from 2006 due mainly to a switch to corn crops. If realized, soybean acreage would be the lowest since 1996, USDA reported. The range of estimates from a Dow Jones Newswires survey pointed to soybeans between 65.927 million and 70.800 million acres. The USDA also estimated March 1 U.S. soybean stocks at a record 1.784 billion bushels, up 7% from 1.669 billion bushels a year ago.

 

In pit trades, JP Morgan bought 1,000 May and 300 November contracts, Tenco bought 600 May, Fimat bought 800 May and 500 November, and RJ O'Brien bought 500 May. UBS Securities sold 500 May and 1,000 July contracts, Calyon Financial sold 800 May, Man Financial sold 600 May, with Fimat, RJ O'Brien and Rosenthal each sellers of 500 May. Speculative fund selling was estimated between 7,000 and 8,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, pressured by speculative fund selling in unison with soybeans. Soymeal futures ended lower, influenced by the feed relationship with corn. Corn's limit-down move attracted speculative selling in the soy complex to firmly plant prices in negative territory throughout the day, analysts said.

 

Soyoil futures fell prey to the speculative selling barrage, with futures succumbing to a technically inspired speculative correction. The inability of the market to draw on spillover support from crude oil left futures unable fight off profit-taking pressures, analysts said.

 

May oil share ended at 43.40% and the May crush ended at 62 cents.

 

In soymeal trades, Tenco bought 1,500 December, Calyon Financial bought 1,000 December, and Fimat bought 1,300 May. Fimat sold 800 May and 500 December contracts, Man Financial sold 600 May, and Tenco sold 500 July. Speculative fund selling was estimated near 4,000 lots.

 

In soyoil trades, Tenco bought 500 May and 1,000 July contracts, JP Morgan bought 800 May, Bunge Chicago bought 500 May, ADM Investor Services bought 400 May, and Fimat