April 21, 2006

 

CBOT Soy Review on Thursday: Beans down on funds, bearish fundamentals

 

 

Soybean futures fell moderately Thursday on fund selling combined with the bearish fundamentals of favorable Midwestern spring weather and weak export sales, sources said.

 

A rally in soyoil, however, helped pare earlier losses in the soy complex.

 

Basis July contracts, Chicago Board of Trade soybeans settled 2 1/2 cents lower at US$5.85 1/4 a bushel, soymeal was down US$2.60 at US$172.80 a short tonne and soyoil closed 25 points higher at 24.52 cents a pound.

 

Soybeans are in a "downtrend responding to their own fundamentals," said Anne Frick, oilseed analyst at Prudential Financial in New York.

 

Planting weather looks "a little bit more accommodative to planting progress, and I think that may have affected the beans and the meal," she said.

 

In the short term, dry weather is seen favoring fieldwork and planting in the central and eastern corn belt, while showers and thunderstorms are expected to slow fieldwork in the upper Midwest, the USDA's Joint Agricultural Weather Facility said.

 

Cooler-than-normal conditions are expected across the north-central U.S. from the Dakotas to Michigan from May through July, while the rest of the area sees equal chances of warmer, cooler or near-normal temperatures, the National Weather Service said Thursday.

 

Above-median precipitation is seen across the western Great Lakes and upper Mississippi Valley, while drier-than-normal conditions are seen from the central and southern Great Plains to the Pacific Northwest, the NWS said.

 

Meanwhile, export sales at or below most trade expectations and also a new marketing-year low was an early bearish influence on the market.

 

Export sales for 2005-06 soybeans were a net 194,600 metric tonnes for the week ended April 13, the U.S. Department of Agriculture said. Sales were down 44% from the previous week and one-third below the prior four-week average.

 

Total shipments were 288,700 tonnes, up 54% from the previous week but down 39% from the prior four-week average.

 

S.A. Trading sold 700 May, Rand Financial and J.P. Morgan each sold 500 July, UBS and FCStonnee each sold 500 May, Calyon Financial sold 300 July, while Citigroup Global Markets, Merrill Lynch, O'Connor and Refco each sold 200 July.

 

Funds sold an estimated 4,500 soybean contracts.

 

ADM bought 200 July, while other buyers were light and scattered.

 

Spreading was active, with Fimat spreading 1,000 July/May at 13 1/2 cents.

 

 

Soy Products

 

The product markets closed mixed, with July soyoil posting a late rally to near six-week highs and soymeal falling in sympathy with losses in soybeans.

 

Soyoil found support from ongoing interest in biofuels as an alternative to petroleum-based fuel as Nymex crude rallied to new highs at one point Thursday, sources said.

 

Spreading also was prevalent in the products, with R.J. O'Brien spreading 3,200 May/July meal contracts and 1,600 July/May oil contracts.

 

In meal, Iowa Grain sold 1,200 July, Man Financial sold 700 July, Rand Financial sold 500 July, Rand Financial sold 500 May and J.P. Morgan sold a net 300 July. FCStonnee bought 600 December, 200 July and 300 August, Rosenthal bought 400 May, Fimat bought 300 July and ADM bought 200 July.

 

Funds sold an estimated 3,500 meal contracts.

 

In oil, Citigroup Global Markets sold 600 July and 200 December, Rosenthal sold 400 July, Tenco sold 300 July, ADM sold a net 200 July, ABN Amro sold 300 December and the Refco division of Man Financial sold 200 July. On the buy side, Man Financial bought 1,000 July, J.P. Morgan bought a net 200 July, Prudential Financial bought 300 July and R.J. O'Brien bought a net 100 July.

 

Funds sold an estimated 1,100 oil contracts, which didn't account for the late rally.