May 11, 2007

 

CBOT Soy Review on Thursday: Ends down, 'treading water' before report

 

 

Chicago Board of Trade soybean futures Thursday settled with modest losses as traders waited for Friday's publication of fresh, government estimates on U.S. old-crop and new-crop ending stocks, analysts said.

 

July soybeans finished down 1 1/4 cents at US$7.46 1/4, and November soybeans settled 1 3/4 cents lower at US$7.75 1/2 a bushel. July soymeal tumbled US$3.00 to US$198.90 per short tonne, and July soyoil rose 41 points to 33.72 cents per pound.

 

The market was "just chopping around" during the day session as traders kept their eyes on the release of the U.S. Department of Agriculture's May supply/demand report, said Doug Houghtonne, market analyst for Brock Associates. The report is due out at 8:30 a.m. EDT.

 

Rapid planting progress in corn has reduced worries about increased soybean plantings, although there's an assumption that some acres have already been added on for soybeans, Houghtonne added.

 

"I think everybody now is just waiting to see what kind of number the USDA gives for 07-08 carryout," Houghtonne said.

 

According to a Dow Jones Newswires survey of 15 analysts, the average estimate for 2006-07 ending stocks was 607 million bushels, down from 615 million in April.

 

The current pace of exports of U.S. soybeans coupled with large unshipped sales suggest exports for the 2006-07 marketing year might exceed the USDA's current 1.08 billion bushels, University of Illinois marketing specialist Darrel Good said in a market report.

 

The average estimate for 2007-08 ending stocks was 337 million bushels, according to a poll of 14 analysts.

 

Going into the release of the data, the soybean market was "kind of just treading water," Houghtonne said.

 

Pressure was seen from commodity funds selling an estimated 2,500 contracts, traders said. In pit trades, UBS sold 800 November, while Tenco sold 800 July and 400 November.

 

A weak tonnee in the CBOT corn market also contributed to the lack of buying interest in soybeans, traders added.

 

Weekly soybean export sales for the week ended May 3 were within trade expectations but still considered "poor," a CBOT floor trader said. Sales totaled 204,200 metric tonnes, according to the USDA.

 

Big buyers included China, which took 116,100 tonnes, and Taiwan, which bought 47,400 tonnes. Total commitments for the year are 28.141 million tonnes, compared to 22.518 million last year.

 

In other news, Brazil's No. 1 soy producing state, Mato Grosso, will unlikely be expanding soy fields next year because of logistical and foreign exchange problems, the president of the Mato Grosso Soy Producers Association said. A weak dollar has cut into profit margins so much that the country's top soy growers are rethinking the soy business, he said.

 

The weaker the dollar, the less cash farmers get when they transfer their soy profits into Brazilian reals. Soybeans are priced in dollars and based on futures on the CBOT. Brazil is the world's No. 2 soy producer behind the U.S.

 

In a related development, Brazil's census bureau, IBGE, raised its monthly soy crop estimate by 0.5% to 57.171 million metric tonnes. The number is lower than the 57.5 million tonne official 2006-07 soy crop estimate, made by the National Commodities Supply Corp. on Tuesday.

 

 

SOY PRODUCTS

 

CBOT soy products ended mixed, with soymeal seen following soybeans into negative territory, an analyst said. Soyoil/soymeal spreading also kept soymeal on the defensive, he added. Rand Financial bought 800 July soyoil and sold 400 July soymeal.

 

Commodity fund buying of an estimated 3,000 contracts helped soyoil move into positive territory, traders said. Overnight gains in palm oil also lent support to soyoil, they said.

 

Funds sold an estimated 1,000 soymeal contracts. In pit trades, JP Morgan spread 1,000 July/September soymeal.