May 9, 2007
CBOT Soy Review on Tuesday: Stumbles on spillover grains' pressure
Chicago Board of Trade soybean futures stumbled Tuesday under spillover pressure from the grains, unable to claw out advances amid supportive ideas that there will not be a big shift of corn acres to soybeans, analysts said.
July soybeans closed down 3 cents at US$7.39 1/2 per bushel, while November soybeans ended 3 1/2 cents lower at US$7.68 3/4. July soymeal ended down US$1.70 at US$199.80 per short tonne, and July soyoil settled flat at 33.04 cents per pound.
Losses in the CBOT corn and wheat markets created a negative tonnee for soybeans, while spillover selling kept a lid on gains, a floor analyst said. Soybeans attempted to push higher in the second half of the day session but were unable to stay in positive territory, he added.
The declines came despite ideas that rapid progress in U.S. corn planting last week meant growers will not sow soybeans instead, a senior market analyst said.
The U.S. Department of Agriculture reported Monday afternoon that U.S. farmers moved corn seedings ahead by 30 percentage points last week, to 53% planted as of May 6 from 23% planted as of April 29. The bigger-than-expected advances lent underlying strength to soybeans, the senior analyst said.
Soggy weather has hampered corn planting recently, and soybeans can be planted later in the spring. The USDA in March pegged 2007 corn seedings at 90.454 million acres and soybean seedings at 67.14 million.
"Last week's corn plantings advanced a little bit quicker than what the trade was looking at," the senior analyst said. "The weather forecast is conducive to getting caught up here this week. That's the whole underlying thinking. Farmers now will have the opportunity to plant the full 90 million (acres) or at least get close to it. If that's the case, maybe soybean acres won't show any increase. If they do, it may be very small."
In pit trades, Bunge sold 400 July, while ADM and JP Morgan each sold 400 July. Fimat and UBS each bought 500 July. Tenco spread 1,000 July/November, and Fimat spread 800 May/July.
There was also not too much support seen from news that the National Commodities Supply Corp., or Conab, lowered its production estimate for Brazil's soybean crop, traders said. Conab said Brazil should harvest 57.5 million metric tonnes of soybeans from the 2006-07 crop, a drop of 0.7% from its March estimate of 57.9 million tonnes.
Conab said dry weather toward the end of the harvest season in the center-west and south had caused minor crop damage. The crop is 95% harvested and will be complete this month, Conab said.
"I don't think it's that big an issue," an analyst said about the downward adjustment. "The South America crop is pretty much tucked away. I think a small adjustment really doesn't change things much."
On Friday, the U.S. Department of Agriculture will release its May supply/demand report, which will include ending stocks estimates for the 2006-07 U.S. soybean crop and the 2007-08 crop. A Dow Jones Newswires survey of 15 analysts showed the average estimate for old crop ending stocks is 607 million bushels, down from 615 million in April. The average estimate for new crop ending stocks is 337 million, according to the survey.
Traders said they expected most market activity to be completed during the first three days of the week. Thursday should largely feature a consolidative trade ahead of the report's release Friday morning at 8:30 a.m. EDT.
SOY PRODUCTS
Biodiesel-related demand for soybean oil and vegetable oil pushed soyoil futures higher and provided some underlying support for soybeans, an analyst said. Funds bought an estimated 500 soyoil contracts. In pit trades, Bunge bought 1,000 July, and Fimat bought 500 July. Fimat, Citigroup and JP Morgan each sold 300 July.
Soymeal closed lower, following soybeans, traders said. Funds sold an estimated 1,000 contracts. In pit trades, Fimat bought and sold 200 July. UBS also bought 200 July, while Man Financial sold 200 July.
