April 29, 2009

 

CBOT Soy Review on Tuesday: Ends lower on weakened demand worries

 

 

Chicago Board of Trade soybean futures tumbled Tuesday on talk that China had canceled purchases of U.S. soybeans, although there was no confirmation of the chatter.

 

July soybeans closed down 14 cents at US$9.83 a bushel, and November soybeans closed down 4 1/2 cents at US$9. July soymeal closed down US$2.30 at US$304 per short tonne, while July soyoil closed down 65 points at 35.19 cents per pound.

 

There were rumors that Chinese importers backed away from purchases, possibly of four to five cargoes of soybeans, a CBOT floor trader said. Crush margins have "collapsed" in China following aggressive buying of soybeans, a CBOT floor analyst said.

 

"I think it's about the demand really," said Don Roose, president of U.S. Commodities. "Soybeans have been a strong, stellar performer, with demand constantly under the market."

 

Traders looking to avoid risk and take money off the table unwound bull spreads, Roose said. There was liquidation of long July/short November spreads following weeks of bull spreading, traders said.

 

Forecasts for wet weather in the central U.S. inspired speculation that delayed U.S. corn planting could lead to a shift in acres to soybeans, which would be particularly bearish for the new crop. However, Tuesday's slump was led by old-crop contracts.

 

"You've got bear spreads working," Roose said. "With the wet weather, you would think the new crop would not be leading the way up. I think it's really all about demand."

 

Weekly U.S. soybean export inspections reported Monday of 6.944 million bushels were weak and below expectations, a CBOT floor trader said. Trading was dominated Monday by bearish fears that an outbreak of swine flu would reduce pork consumption and animal feed demand.

 

The setback in nearby soybean futures came ahead of first-notice day for May futures contracts Thursday. First-notice day is the first day on which notices of intention to deliver actual commodities against futures-market positions can be received. Nearby May soybeans ended down 15 1/4 cents at US$9.89 1/2.

 

Commodity funds sold an estimated 4,000 contracts.

 

 

Soy Products

 

CBOT soy product futures finished lower with soybeans. Bearish chatter about weakened export demand for U.S. soy weighed on the complex, traders say. Weakness in crude oil added pressure to soyoil, a trader said.

 

Commodity funds sold an estimated 2,000 contracts of soyoil and were seen as even in soymeal.