April 11, 2006

 

CBOT Soy Review on Monday: Down; carve out new move lows

 

 

Chicago Board of Trade soybean futures extended their defensive theme Monday, carving out new lows for the current move, as bearish underlying fundamentals continued to cast a bearish cloud over the market.

 

May soybeans finished 2 1/2 cents lower at US$5.55 1/4, May soymeal settled US$2.70 lower at US$168.40 a short tonne, while May soyoil ended 10 points higher at 22.64 cent a pound.

 

The weight of record supplies, tepid export demand and technical weakness overshadowed mildly supportive supply and demand data from the U.S. Department of Agriculture, analysts said.

 

The inability of futures to attract follow-through buying after futures opened higher sent defensive signals to traders, with early buyers running for cover. Technically based selling emerged to extend the declines with downside movement accelerating once nearby May futures penetrated support at last week's lows.

 

This was a consistent theme, but underlying buying beneath the market did provide support to limit declines after futures satisfied its technical objectives of setting new lows, said a CBOT commission house broker.

 

Otherwise, the market had little fresh news to direct prices, with the USDA's data quickly absorbed, returning attention to bearish supply-side fundamentals. Meanwhile, support from outside markets did little to offset the defensive tonnee, as a net short speculative position in the market kept buyers hesitant of aggressively pushing prices, traders said.

 

In its key monthly crop report, the USDA on Monday left its forecast for 2005-06 U.S. soybean ending stocks unchanged at a record 565 million bushels. Analysts anticipated a modest upward revision in the carryout. The USDA also trimmed its forecast for 2005-06 global soybean ending stocks to 53.75 million metric tonnes after trimming its forecast for Brazilian soybean production to 57 million metric tonnes.

 

The DTN Meteorlogix outlook forecast said the South American soybean harvest situation offers a mixed outlook for progress. Weekend rains in Brazil's south-central and southern areas brought some harvest delays. However, this week's outlook brings a drier weather pattern, which should allow harvest to resume by the middle of the week at the latest.

 

In Argentina, after heavy weekend rains, showers and thunderstorms will again occur in Cordoba and Santa Fe during the last part of the week. Buenos Aires province received only light showers, and thus does not have the extensive harvest delay that confronts Cordoba and Santa Fe, Meteorlogix said.

 

Brazilian agribusiness consulting firm AgRural revised its monthly 2005-06 soy harvest to 54.7 million metric tonnes on Monday, down from its March estimate of 56.3 million tonnes due poor yields in Parana and Mato Grosso states. AgRural also estimated the Brazilian soybean harvest roughly 62% harvested as of April 7.

 

Meanwhile, Argentine farmers have harvested 27% of the 2005-06 soybean crop, the Buenos Aires Cereals Exchange reported Monday. That puts the collection pace down 1.1 percentage points from a year ago.

 

In pit trades, Citigroup bought 1,000 May, Goldenberg Hehmeyer bought 400 May and Rosenthal bought 700 July. Bunge Chicago, Fimat and RJ O'Brien were each sellers of May and July soybeans. South American soybean futures ended lower, in step with U.S. soybean futures. The May future finished 1/2 cents lower at US$5.82.

 

 

SOY PRODUCTS

 

Soymeal futures ended on their lows, producing a new 14-month low. Speculative sellers extended their net short positions in the market, with sympathetic selling from soybeans and soyoil/soymeal spreading helping pin futures in negative territory. Growing competition in domestic protein markets including corn byproducts reported by the USDA helped add to the defensive tonnee in the market, analysts say.

 

Soyoil futures managed to divorce themselves from the bearish theme in the rest of the soy complex, benefiting from speculative buying, as strength in crude oil futures sparked ideas of increased biodiesel fuel use, analysts say.

 

May oil share ended higher at 40.19%, and the May crush was at 64 1/4 cents.

 

In soymeal trades, Term Commodities and Fimat were buyers. ABN Amro sold 1,000 May, Fimat sold 400 May and JP Morgan sold 700 May and 300 July. Commodity funds were net sellers on the day.

 

In soyoil trades, JP Morgan bought 300 May, Tenco bought 400 July, ABN Amro, Citigroup and Rand Financial were sellers on the day. Commodity funds were net buyers on the day.