April 6, 2004

CBOT Soy Review On Monday: Beans, Meal Fall Sharply Off Highs
 
Soybean and soymeal futures at the Chicago Board of Trade settled sharply lower Monday, making a complete technical reversal from the early rally that took beans and meal into contract highs.
 
Prices traded both extremes for the day, ending the session with a 42-cent trading range in the May contract. And as fresh fundamental news relevant to the market was considered scarce, price control was left mostly to speculative traders and technical influences, traders said.
 
According to one trade source on the floor, the front end of the market fell sharply relative to the back due to influences from the corn pit.
 
"The beans are getting nervous about the roll in corn," the independent broker said.
 
According to market data, open interest in the Dec corn contract has increased while the May contract has decreased. Sources said it is due to commission houses already moving longs out of the May and into the Dec, which could have a similar influence in the beans. By the close, the May/Nov soybean spread narrowed to $2.37, down from $2.61 on Friday.
 
May soybeans settled 21 cents lower at $10.24 1/2 a bushel, and Nov beans were 2c lower at $7.82 1/2 a bushel. May soymeal finished $9.50 lower at $326.50 a short ton, and May soyoil ended 10 points higher at 32.74c a pound.
 
Fundamentally, sources said the cash market brought news to the nearby contracts as soybean premiums at the Louisiana Gulf fell hard, dropping by 4c throughout the day to 26c over the CBOT May contract for April delivery. The midday quote of 26c was 8c lower than one week ago.
 
Bob Utterback of Utterback Marketing Services in Elkhorn, Wis., said the reverse could also be true. "It's like the chicken and the egg argument," he said. "Probably the cash started to weaken in anticipation of the board weakening."
 
Mostly, Utterback said, trade was technical with traders wanting to even up for Thursday's supply and demand report and with bears wanting to take profits.
 
Meanwhile, the weekly soybean export inspections report revealed a number much lower than expected. For the week ending April 1, soybean inspections totaled 6.954 million bushels, which was below industry estimates ranging from 10 million to 13 million bushels. The figure was also just over half of what was inspected in the previous report, according to the U.S. Department of Agriculture.
 
Major CBOT soybean buyers were Archer Daniels Midland with 30 Jly, ABN AMRO with 400 May, Man Financial with 200 May, R.J. O'Brien with 300 Jly, Shatkin Arbor Karlov with 200 May, and DT Trading with 300 May.
 
Featured sellers were Archer Daniels Midland with 200 May, Produce Grain with 500 Jly, Carr Futures and Fimat with 200 May, Goldenberg Hehmeyer with 600 May, Man Financial with 200 Jly, R.J. O'Brien with 500 May, and Refco with 1,300 May.
 
Cargill spread 500 May/Jly.
 
SOY PRODUCTS
 
Soybeans followed behind the lead of soymeal throughout the day as they both climbed to new contract highs early in the session, but retreated by midday. Earlier in the session, the May contract topped out at $342.00 a short ton - the highest price soymeal has been since July 1973 when prices reached $361.50. The highest price on record is $451.00 made in June 1973.
 
May crush rose to 54c, up from 52 3/4c on Friday, and May oil share rose to 32.75%, up from 32.69%. May soyoil futures rose only slightly, increasing 0.31% in value.
 
In soymeal trades, Fimat with 300 Jly, Prudential Securities with 100 Aug and 300 Jly, R.J. O'Brien with 100 May and 100 Jly, and Citigroup Global Markets with 200 May. Archer Daniels Midland sold 400 may, Cargill sold 300 May, 300 Jly, 300 Aug, 100 Sep, 100 Oct and 100 Dec, Carr Futures sold 400 May, Cargill Investor Services sold 200 May, Merrill Lynch Futures sold 300 May, and Refco and Tenco both sold 200 May.
 
In soyoil, Archer Daniels Midland bought 200 May and 500 Jly, Produce Grain sold bought Jly, 100 Aug, 100 Sep, and 200 May. Carr Futures bought 200 May, Cargill Investor Services sold 700 May, Fimat bought 500 Jly, Man Financial bought 1,500 Jly, and Tenco bought 200 Jly. R.J. O'Brien sold 300 Jly and 100 May, Refco sold 300 Jly and 100 May, and Citigroup Global Markets sold 400 May and 100 Jly.