April 27, 2006

 

CBOT Soy Review on Wednesday: Light fund sales pressure soybeans

 

 

Soybean futures at the Chicago Board of Trade fell moderately Wednesday on light fund sales in the absence of fresh fundamental news and mostly favorable pre-planting conditions across the Midwest, traders and analysts said.

 

Basis July futures contracts, soybeans settled 3 1/4 cents lower at US$5.90 a bushel, soymeal was down US$0.80 at US$173.60 a short tonne, and soyoil ended 6 points lower at 25.20 cents a pound.

 

In addition to the favorable planting conditions that have allowed farmers to plant 25% of the U.S. corn crop as of Sunday, ahead of the five-year average, cash soybean movement out of South America and no visible U.S. exports contributed to the weak tonnee, said independent agricultural analyst John Kleist.

 

Losses were limited, however, by a steady to weaker U.S. dollar, concerns over inflation and the ongoing interest in biofuels as an alternative to petroleum-based energy products.

 

Also, ideas that the U.S. planted area will be less than the U.S. Department of Agriculture's 72.1 million-acre estimate helped limit the losses, as the beneficial planting weather may encourage farmers to seed more corn, Kleist said.

 

The market remains conflicted, however, over the size of the Brazilian crop, which is expected to be reduced because of heavy rains interrupting the harvest.

 

Technically, July soybeans closed at their moving averages Tuesday - but not above - and failed at those levels on Wednesday, Kleist noted. "We're kind of crunched here sitting between the major moving averages and the 10-day moving average," he said.

 

Weekly export sales on Thursday morning will likely dictate near-term price direction.

 

Don Roose, analyst and president of U.S. Commodities in West Des Moines, Iowa, looks for sales of 150,000-300,000 metric tonnes and says traders will be anxious to see the report for any signs of a slowdown in world demand.

 

Traders will also be watching for the Census Bureau crush report due Thursday morning, which is expected to show an increase based on the latest March data from the National Oilseed Processors Association, which estimated the crush at 142.9 million bushels. Some analysts look for a crush rate of nearly 150 million bushels, while others expect anywhere from 143-145 million bushels.

 

In soybeans, funds sold an estimated 1,000 contracts as of 1:30 p.m. EDT, putting light pressure on the market.

 

Goldenberg Hehmeyer sold 400 July beans, Citigroup Global Markets sold 300 July, and J.P. Morgan and Rand Financial each sold 200 July. Man Financial bought a net 200 July, while ADM and Calyon Financial each bought 200 July and Tenco bought 200 May.

 

 

SOY PRODUCTS

 

Soy product futures closed weaker, pressured by light fund selling and following the overall bearish tonnee in soybeans. Prices closed off of session lows, however, on worries over U.S. inflation and interest in alternative fuels such as biodiesel.

 

Speculative interest in the markets, however, was minimal. Prices held to relatively narrow ranges in a quiet news day.

 

Weak crude palm oil prices in Malaysia overnight on ideas the market there may be overdone on the high side contributed to pressure in the CBOT soyoil pit.

 

Funds were even in soymeal and had sold about 400 soyoil contracts.

 

Man Financial sold 400 December meal and 200 July, and Bunge sold 400 May, while R.J. O'Brien bought 400 July and Prudential bought 300 July.

 

In soyoil, Man Financial bought 800 July, Fimat bought 400 July, and Trade Link bought 300 July. Rand, Refco and Rosenthal each sold 400 July, and Citigroup sold 300 July.