April 1, 2008

 

CBOT Soy Review on Monday: Plummet daily limits on bearish USDA data

 

 

Chicago Board of Trade soybean futures plummeted Monday, selling off in response to bearishly construed prospective acreage forecasts and stock in all positions data from the U.S. Department of Agriculture.

 

May soybeans settled 70 cents lower at US$11.97 1/4, July soybeans finished 70 cents lower at US$12.15 and November soybeans ended 70 cents lower at US$10.89 1/2. May soymeal settled US$20.00 lower at US$322.30 per short tonne. May soyoil finished 350 points lower at 51.48 cents per pound.

 

Monday CBOT soybean futures plunged to their lower 70 cent daily trading limits, in response to the USDA's acreage and stocks forecasts.

 

The USDA data served as the catalyst to extend a sell-off in futures, as the data effectively changed the psychology of the market, and shaped the direction of prices moving forward, analysts said.

 

There is a sell-off in place, and there is still more downside potential in the soybean market, said Anne Frick, senior oilseed analyst with Prudential Bache Commodities in New York.

 

The acreage figure highlighted the potential for less threatening new crop inventories, and with higher estimated old crop supplies it doesn't point to a situation that is as tight as it was previously forecast, analysts said. Speculative selling was the dominant force in the market place, as traders trimmed premium from prices amid the perception of less risk potential, analysts added.

 

USDA pegged 2008 US soybean acres at 74.793 million, above trade expectations and up 18% from 2007's seeded acreage of 63.631 million.

 

Soybean stocks as of March 1, 2008, were 1.428 billion bushels, higher than the average estimate of 1.352 billion bushels and above the upper end of trade of a Dow Jones Newswires survey at 1.425 billion.

 

The stocks data is showing the 2007-08 soybean crop was underestimated, but the increase in supplies on the old crop balance sheet will be offset by increased export demand and usage for seed, Frick added.

 

Looking ahead, downside potential remains in place, with nearby futures currently taking aim at the US$11.40 to US$11.50 price level, analysts added.

 

Traders said May soybeans were synthetically trading between US$11.73 and US$11.80 in the options pit. The synthetic options price for May soymeal was between US$320.00 and US$322.30 per short tonne, with the synthetic May soyoil contract trading at 51.30 to 51.48 cents per pound.

 

By virtue of the soy complex settling at their respective lower daily trading limits, price limits will expand for all three legs of the complex. Soybean daily limits will expand to US$1.05 per bushel, Soymeal limits expand to US$30.00 a short tonne, and limits on soyoil expand to 550 points, or 55 cents, per pound.

 

In pit trades, Speculative fund selling was estimated at 6,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended sharply lower, plunging to their lower daily trading limits. The markets were pressured by the USDA's data ahead of the opening that revealed more old crop soybean inventories and a significant increase in 2008 projected acreage, analysts said. The USDA data took some fears of supply tightness out of the markets, effectively reducing some premium from prices and attracting additional long liquidation pressure, analysts added.

 

May oil share ended at 44.40%, and the May crush ended at 78 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 2,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 2,000 lots.