May 8, 2007

 

CBOT Soy Review on Monday: Closes lower amid spillover corn pressure

 

 

Chicago Board of Trade soybean futures slipped Monday under pressure from the neighboring corn market and amid expectations for advances in planting, analysts said.

 

July soybeans closed down 5 cents at US$7.42 1/2 per bushel, while November soybeans finished 4 cents lower at US$7.72 1/4. July soyoil settled down 13 points at 33.04 cents per pound, and July soymeal ended down US$1.00 at US$201.50 per short tonne.

 

CBOT corn closed sharply lower on profit-taking and outlooks for drier weather that should allow planting to move ahead, said Tim Hannagan, analyst for Alaron Trading. There was spillover selling from corn onto soybeans and pressure from ideas that soybean planting will also progress during the dry spell, he said.

 

The DTN Meteorlogix forecast has a drier weather pattern in place across the Midwest this week. The pattern will benefit the drying-out of topsoil in the soggy western sector of the region and be favorable for further planting of corn and soybeans in the eastern areas of the Midwest, the weather firm said.

 

Rainfall will total no more than 3/4 inch, mostly in the Mississippi Valley in Iowa and Illinois, while temperatures will be normal to above normal, Meteorlogix said.

 

"If you're going to plant corn this week, you're going to plant beans," Hannagan said. "Beans are still the tail of the dog, following corn for the most part."

 

The U.S. Department of Agriculture on Monday afternoon will report on soybean planting activity in its weekly crop progress report. U.S. farmers are estimated to have planted 6%-10% of their crop as of May 6, analysts said. As of April 29, 3% of the U.S. soybean crop had been planted, compared with the five-year average of 7%, according to the USDA.

 

Looking ahead, the soybean market should continue to focus on the weather, Hannagan said. A USDA supply and demand report due out Friday won't contain much information for soybeans and isn't expected to hold any big surprises, he added.

 

The report is slated to include new estimates for old-crop and new-crop soybean ending stocks.

 

"I think that corn and beans continue to focus on weather and its impact on planting progress," Hannagan said. "They'll pause for that report on Friday, but they expect nothing out of it."

 

There was also pressure on soybeans from funds selling an estimated 2,000 contracts, traders said. In pit trades, Bunge sold 500 July, and Fimat sold 300 July.

 

Large commercial traders in the week ended May 1 cut their long CBOT soybean futures and options positions by 12,889 contracts and added 3,831 shorts, the Commodity Futures Trading Commission said. They were net short 154,073 contracts.

 

Large speculative traders increased their long futures and options on futures positions by 9,768 contracts and reduced their short positions by 6,936 contracts, the CFTC said. The speculative trades were net long 49,529 contracts.

 

 

SOY PRODUCTS

 

CBOT soy products closed in negative territory amid technical profit-taking, an analyst said. There also was light soymeal/soyoil spreading, along with pressure on soyoil from overnight declines in Malaysian palm oil, a CBOT floor trader added.

 

Fund selling of an estimated 2,000 soyoil contracts and 1,000 soymeal contracts shoved prices lower, traders said. Declines in soybeans and corn added to the negative tonnee, they said.

 

In soymeal pit trades, Fimat bought 400 July and JP Morgan bought 300 July. Citigroup sold 300 July. In soyoil trades, Fimat bought 500 July and sold 500 July. Bunge bought 500 July, while UBS sold 600 July and Rand Financial sold 400 July.

 

Large speculative traders increased their long CBOT soybean oil futures and options on futures positions by 10,379 contracts as of May 1 and cut 1,743 contracts from their short positions, according to the CFTC. They were net long 70,837 contracts.

 

Large commercial traders increased their short soyoil futures and options on futures positions by 6,774 contracts and reduced their long positions by 5,703 contracts, the CFTC said. They are now net short 155,770 contracts, the CFTC said.

 

Large commercial soybean meal traders cut their long futures and options on futures positions by 5,742 contracts and reduced their short positions by 5,904 contracts are and now net short 28,671 contracts, the CFTC said.