May 16, 2008

 

CBOT Soy Review on Thursday: Lower on crude, Argentina news; late recovery

 

 

Soybean futures at the Chicago Board of Trade closed lower and near the session mid-ranges Thursday, on profit-taking pressure from recent gains amid reports from Argentina that the farmers' strike there may be abating.

 

Lower crude oil futures also weighed on the soy complex. However, a late rebound from daily lows in crude oil allowed the soy complex markets to do the same.

 

July soybeans closed down 32 cents at US$13.47 1/2. November soybeans closed down 13 3/4 cents at US$13.19 1/4.

 

Soy complex traders are anxiously awaiting news out of Argentina regarding a farmers' strike and whether it will continue or end soon. "Softer comments by Argentina's president Wednesday are giving some hope that the government may be more willing to sit down and seriously discuss soy taxes with farmers," said Brian Grete, senior market analyst with Pro Farmer. There was speculation overnight that the Argentine farmers' strike was coming to an end.

 

However, Thursday afternoon, one of four farm group leaders meeting to decide whether to continue with the blockade on grain sales said they were likely to announce a continuation in the strike later Thursday.

 

Eduardo Buzzi, leader of the Argentine Agrarian Federation, which represents small-scale farmers, said the "will" of his and other groups' members "is very strong" to continue with their latest strike, which began eight days ago in protest of a March 11 hike in soybean export taxes.

 

"We need to see concrete results from the government," said Buzzi.

 

"Profit-taking provided early pressure and losses were extended at midday as sell stops were triggered," said Brian Grete, senior market analyst with Pro Farmer. Traders were also unwinding long soybean/short corn spreads which they've built recently, he said.

 

Technical selling also helped drive prices lower," said Brian Hoops, an analyst with Midwest Market Solutions. "Crude oil is sharply lower today and that encouraged selling and profit taking, especially in meal and oil," he said. "This morning's China sale is long forgotten and momentum has turned down," said Hoops.

 

USDA reported this morning that 126,000 metric tonnes of U.S. soybeans have been sold to China. Of that total, 60,000 tonnes are for delivery in the 2007-08 marketing year and 66,000 tonnes are for delivery in the 2008-09 marketing year.

 

Commodity funds were reported sellers of an estimated 6,000 contracts of soybeans.

 

Technically, July soybeans on Thursday filled on the downside last week's upside price gap on the daily bar chart, which added to selling pressure, said a market technician.

 

Meanwhile, there continues to be uncertainty regarding eventual 2008 acreage. Informa Economics has reportedly estimated 2008 soy acreage at 73.3 million acres, down 1.46 million acres from the USDA prospective planting estimate but 2 million more than the firm's March projection.

 

The U.S. Department of Agriculture Thursday morning reported total weekly soybean export sales were 201,700 metric tonnes. The 2007-08 sales totaled 201,400 tonnes or 7.4 million bushels for the week ended May 8. Analysts had forecast sales between 75,000 and 250,000 metric tonnes. The 2007-08 sales were primarily for China with 65,800 metric tonnes, and Indonesia with 49,900 tonnes.

 

 

SOY PRODUCTS

 

Soybean meal and soybean oil futures also closed lower but well off their daily lows Thursday. July soybean meal closed down US$7.70 a tonne, at US$344.00. July soybean oil closed down 145 points at 60.05 cents a pound.

 

The soy products were also pressured by the rumors and reports coming out of Argentina, regarding the farmers' strike there. Also, lower crude oil prices weighed on the products, especially soybean oil, said an analyst.

 

Commodity funds were reported sellers of an estimated 3,000 contracts each of soybean meal and soybean oil.

 

USDA Thursday reported in its weekly report that soymeal sales were a net 116,800 tonnes, within trade estimates of 50,000 to 150,000 tonnes. Soyoil commitments were 10,800 metric tonnes, just above trade estimates of 5,000 to 10,000 tonnes.

 

In other news, China imported 300,000 metric tonnes of soyoil in April, up 40.5% from a year earlier, according to preliminary data issued by the General Administration of Customs Thursday. The country imported 1.02 million tonnes of soyoil in the first four months, up 28.3% on year, it said.