April 8, 2006

 

CBOT Soy Review on Friday: Futures end week on defensive

 

 

Chicago Board of Trade soybean futures closed the trading week on the defensive Friday, retreating from Thursday's muted gains ahead of Monday's U.S. Department of Agriculture supply and demand reports.

 

May soybeans finished 6 1/4 cents lower at US$5.57 3/4, May soymeal settled US$1.60 lower at US$171.10 a short tonne, while May soyoil ended 13 points lower at 22.54 cent a pound.

 

The absence of supportive outside influences that underpinned prices Thursday, forced the market to focus on its bearish underlying fundamental base, with analysts expecting the USDA to increase its already record projected ending stocks projections in Monday's reports, analysts said.

 

The defensive theme was consistent from the outset, with futures establishing the session's trading range in the first half hour of trading. A quiet news front kept traders in a position-evening mood, unwilling to take on added risk with the USDA expected to reconfirm the oversupply of U.S. and global soybeans as well as the need to shift some acres from soybeans to other grains, analysts added.

 

This continued, with flat price action relatively quiet into the close, with news of China buying a large quantity of new crop U.S. soybeans seen as priced in the market previously. Otherwise, spread rolling was a featured attraction, with participants rolling out of May positions ahead of the delivery period at the end of the month.

 

Meanwhile, USDA is scheduled to release its April supply and demand revisions Monday at 7:30 a.m. CDT (1230 GMT). The average of analysts' estimates projects ending stocks at 574 million bushels. The estimates ranged from 555 to 602 million bushels. In March, USDA projected the 2005-06 carryout at 565 million bushels.

 

The USDA announced Friday private export sales of 1.752 million metric tonnes of U.S. soybeans for delivery to China in the 2006-07 marketing year. Thursday, 13 Chinese soybean processing companies signed 10 contracts with U.S. agricultural exporters to buy 4.98 million metric tonnes of U.S. soybeans and 20,000 tonnes of U.S. soyoil in calendar year 2006.

 

The DTN Meteorlogix outlook forecast said in South America, Mato Grosso, Brazil, scattered showers and thunderstorms will be common through the weekend. A drier spell develops Tuesday and Wednesday. It will definitely be showery with delays in soybean harvest in this large-producing province during the next three to four days. Elsewhere in Brazil, conditions will be drier for harvest progress.

 

Argentina's weather pattern will feature scattered thundershowers into Saturday, before turning mostly dry through Wednesday of next week. The last half of next week could bring some wet weather to the Argentina central crop belt and will need to be monitored for its effect on harvest, Meteorlogix said.

 

In pit trades, UBS Securities bought 600 May, Calyon Financial bought 500 May, Bunge Chicago, Citigroup and JP Morgan each bought 300 May.

 

On the sell side, ABN Amro sold 500 July, Citigroup and Merrill Lynch each sold 400 May, Man Financial sold 1,000 May and RJ O'Brien sold 300 May. Commodity funds were net sellers on the day.

 

In spreads, Fimat spread 2,500 July/May, Refco spread 2,100 May/July, ADM spread 1,100 May/July, and Iowa Grain spread 2,000 July/May. South American soybean futures ended lower. The May future finished 6 1/2 cents lower at US$5.82 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, in step with the declines in soybeans. Soymeal futures slipped to a 14-month low in sympathy with soybeans, staging a modest correction from Thursday's gains. Soyoil followed a similar path, consolidating Thursday's gains.

 

May oil share ended at 39.71%, and the May crush was at 66 1/2 cents. In soymeal trades, Fimat sold 600 May, Man Financial sold 300 May, JP Morgan sold 800 May. Commodity funds were estimated sellers of near 2,000 contracts

 

In soyoil trades, ADM Investor Services bought 300 May, Bunge Chicago bought 500 May, JP Morgan bought 400 July and RJ O'Brien bought 600 July. Sellers were scattered among various commission houses, with Citigroup and Man Financial each selling 300 May. Commercial firms were net buyers on the day and commodity funds were net sellers.