April 11, 2007

 

CBOT Soy Review on Tuesday: Lower on technical, S/D data, acres concerns

 

 

Chicago Board of Trade soybean futures ended lower Tuesday, succumbing to a combination of technical pressures, bearish supply and demand data, and acres concerns.

 

May soybeans ended 6 1/2 cents lower at US$7.42 1/2, July soybeans settled 6 cents lower at US$7.60 1/2, and November soybeans finished 5 3/4 cents lower at US$7.87 1/2. May soymeal settled US$4.60 lower at US$204.80 per short tonne. May soyoil ended 38 points higher at 32.46 cents a pound.

 

The chart pattern for the soybean market has turned negative, the supply/demand report verified growing stocks, and with wet weather feeding ideas of some acreage shifting back to soybeans, traders unwound soybean/corn spreads, said Don Roose of US Commodities in West Des Moines, Iowa.

 

The defensive theme was consistent over the course of the day, with prices testing the bottom end of a month-long trading range. From a technical standpoint, the market is weak, with active contracts settling below major moving average resistance at their respective 50-day moving averages for the third consecutive day, said Chad Henderson, analyst with Prime Ag Consultants in Brookfield, WI.

 

The DTN Meteorlogix forecast calls for widespread moisture across the Midwest during the next five days. Moisture will occur as a mix of rain and snow. Snowfall will cover much of the upper Midwest and the Northern Plains, with up to six inches likely in the Dakotas, Minnesota and northern Iowa. This round of precipitation, including the unseasonable snowfall, will continue to stymie spring field work in the Corn Belt. Total precipitation by the end of the week in the Midwest will range up to two inches in southeast Iowa through Illinois, Indiana and Ohio.

 

The next 10 days offer very little in the way of a significant warm up for the primary U.S. crop areas. This cool temperature trend will further impede spring field work, and will slow down the early growth process of corn which has already been planted, Meteorlogix forecasts.

 

The USDA estimated U.S. soybean ending stocks at a record 615 million bushels, up 20 million from the March estimate of 595 million and above the average analyst estimate of 586 million bushels. Soybean exports are reduced 20 million bushels, reflecting slower-than-expected shipments to date reported by the U.S. Census Bureau, USDA reported. Soybean crush is forecast at 1,765 million bushels, down 15 million bushels from last month.

 

On the world scene global soybean stocks were raised 3.52 million metric tonnes to 61.02 million, up from 57.5 million tonnes in March. Brazil soybean production was raised 1.8 million tonnes to a record 58.8 million tonnes. Soybean production is raised by a combined 2.3 million tonnes for Argentina and Paraguay. The Argentina crop is projected at a record 45.5 million tonnes, up 1.5 million tonnes from last month.

 

In pit trades, Bunge Chicago bought 200 May, Tenco bought 500 May and USA Trading bought 1,500 May. Fimat sold 300 May, Man Financial sold 500 May and 300 July, and UBS Securities sold 600 May and 300 July. Speculative finds were estimated sellers of 2,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with the products diverging over price direction. Soyoil futures emerged as the strongest link in the soy complex Tuesday, divorcing itself from weakness in the rest of the complex. Strong world demand for vegoils, palm oil futures reaching fresh eight-year highs, and higher crude oil futures served as the catalysts to underpin prices, analysts said.

 

Soymeal futures stumbled lower, falling to their lowest levels since Jan. 11. Soyoil/soymeal spreading weighed heavily on meal, with declining demand amid increased competition from distillers dried grains applying pressure, analysts said. USDA data reaffirming slow downs in soymeal demand set the stage for the setback, analysts added.

 

USDA lowered projected domestic soybean meal use and reduced prospects for soybean meal exports in its April supply and demand report. Although soybean meal exports have been strong through the first half of the marketing year, sharply higher South American supplies are expected to reduce the competitiveness of U.S. soybean meal in the second half of the year, USDA reported.

 

May oil share ended at 44.21% and the May crush ended at 65 cents.

 

In soyoil trades, Bunge Chicago bought and JP Morgan each bought 300 May, and Tenco bought 600 December. Sellers were widely scattered among various commission houses, with JP Morgan a seller of 300 May. Speculative fund buying was estimated near 5,000 contracts.

 

In soymeal trades, Bunge Chicago sold 300 May, Fimat sold 700 May and UBS securities sold 200 July. ADM Investor Services sold 300 May and 300 July, Calyon Financial sold 500 July, Fimat sold 1,100 May, Iowa Grain sold 600 May, and RJ O'Brien sold 300 May. Speculative fund selling was estimated between 5,000 and 6,000 contracts.