April 4, 2006

 

CBOT Soy Review on Monday: Stumbles lower; bearish fundamentals

 

 

Chicago Board of Trade soybean futures prices finished lower Monday, stumbling to 4-month lows on a continuation of Friday's declines amid bearish fundamental outlooks.

 

May soybeans finished 6 1/2 cents lower at US$5.65, May soymeal settled US$1.50 lower at US$173.10 a short tonne, while May soyoil ended 15 points lower at 22.64 cents a pound.

 

The lack of supportive market features promoted a defensive theme, as prices continue to erode in the face of bearish fundamentals, said John Kleist of Kleist Agricultural Consulting.

 

The market remains in a digestive mood, attempting to factor in the bearish implications of higher projected acreage, and ample old-crop supplies on top of a large South American crop being harvested, traders said.

 

The market initially encountered choppy activity, with prices trading on either side of unchanged levels. However, the exhaustion of early buying support opened the door for speculative selling pressure to drag prices to multi-month lows, with traders waiting to see if commodity funds have a taste to aggressively press the short side of the market, added Kleist.

 

Otherwise, the liquidation and rolling of May positions was a featured attraction, with commercial selling seen as defensive influence on prices as well.

 

The U.S. Department of Agriculture reported Monday that U.S. soybeans inspected for export in the week ended March 30 totaled 13.159 million bushels. The inspections were down 49.1% from the prior week's 25.864 million. Pre-report estimates forecast the inspection figure would fall within a range from 13 million to 22 million. Accumulated soybean inspections total 710.915 million bushels, down 20.1% from the amount inspected at the same time last year.

 

The DTN Meteorlogix forecast calls for a two- to three-day stretch of drier weather following a rainy weekend and occurrences of severe weather from central Iowa through Illinois, along with flooding in Minnesota through Iowa due to swollen rivers and streams. Following the dry conditions, a new round of showers and thunderstorms are forecast to develop in the last part of this week, with rainfall totals as much as one inch again in the region, Meteorlogix added.

 

In South America, generally dry conditions are in store for the southern and central areas of Brazil's soybean belt. Argentina had mostly dry weather during the past weekend, with thundershowers expected through Tuesday, followed by more dry conditions in the central crop belt. The problem area for harvest delays continues to be Mato Grosso, Brazil, as a result of pesky daily occurrences of thunderstorms. Soybean harvest concerns are few in Brazil and Argentina, except for those delays in Mato Grosso, Meteorlogix said.

 

Meanwhile, Argentine farmers will harvest a record 40.4 million metric tonnes of soybeans in 2005-06, the Buenos Aires Cereals Exchange forecast Monday. The forecast, which is up from 40 million tonnes a week ago, is based on higher-than-expected yields in key production areas. Last year, farmers produced a record 38.85 million tonnes of soy, according to the exchange.

 

In pit trades, ADM Investor Services, Rand Financial, Tenco, UBS Securities, USA and DT Trading each bought 500 May, Calyon Financial bought 400 November and Fimat bought 1,000 July.

 

On the sell side, Term Commodities, and UBS Securities each sold 500 May, Calyon Financial and O'Connor each bought 600 May, Citigroup sold 2,500 May, Man Financial and JP Morgan each sold 1,000 May.

 

Commodity fund selling was estimated near 5,000 contracts.

 

South American soybean futures ended lower. The May futures finished 6 3/4 cents lower at US$5.86.

 

 

SOY PRODUCTS

 

Soymeal and soyoil futures ended lower across the board. The soy products retreated to the lower end of their recent trading ranges on carryover selling from Friday's losses and sympathetic selling with soybeans. The bearish implications of abundant soybean supplies attracted sellers to pin both soymeal and soyoil in negative territory, traders said.

 

May oil share ended at 39.54%, and the May crush was at 64 3/4 cents.

 

In soymeal trades, JP Morgan bought 800 May, with Iowa Grain a seller of 1,800 May, Merrill Lynch sold 500 May and JP Morgan sold 300 May.

 

In soyoil trades, Iowa Grain bought 400 July, Man Financial bought 400 July and Tenco bought 400 December. Bunge Chicago sold 300 July, Fimat and Man Financial each sold 300 May.