May 23, 2009

 

CBOT Soy Review on Friday: Ends mixed as traders unwind bull spreads

 

 

Chicago Board of Trade soybean futures closed mixed, with nearby contracts sinking as traders took profits ahead of the weekend and unwound bull spreads.

 

July soybeans dropped 9 cents to US$11.66 per bushel, and November soybeans rose 8 cents to US$10.31 1/2. July soymeal fell US$4.20 to US$375 per short tonne, and July soyoil gained 12 points to 38.10 cents per pound.

 

Despite the setback in nearby July soybeans, the fundamental story line remains bullish for the old crop, an analyst said. Supplies are tight, and demand remains robust as production problems in South America send buyers to the U.S.

 

Drought has slashed 2008-09 soy production in Argentina, which is traditionally a major exporter on the world market. The Buenos Aires Cereals Exchange in its weekly crop report this week trimmed its production forecast 600,000 tonnes from the previous week to 32.2 million tonnes, compared with 46.2 million last year.

 

"The bottom line is demand is still so strong for U.S. soybeans old-crop," said Joe Victor, vice president of marketing for Allendale. "Argentina is essentially not a factor right now. The world is coming to the U.S. continually."

 

Weekly U.S. soybean export sales, issued Thursday by the U.S. Department of Agriculture, were strong despite high prices, traders said. Total weekly export sales were a net 1.4 million tonnes for the week ended May 14, above trade expectations for 500,000 tonnes to 850,000 tonnes. Sales for 2008-09 were 700,600 tonnes.

 

The old-crop demand, in particular, was "unbelievable," an analyst said. Buyers would normally shift their purchases to South America from the U.S. at this time of year.

 

Private analysts have lowered their forecasts for old-crop U.S. soybean ending stocks lately, with some calling for a carryout below 100 million bushels. The U.S. Department of Agriculture on May 12 estimated 2008-09 U.S. soybean inventories at 130 million bushels.

 

The main bear argument in the near term is that new-crop prices have moved high enough to attract additional planted acres, an analyst said. Corn and soybeans compete for acres in the Midwest, and planting of both crops has been delayed in certain areas by excessive wetness.

 

 

Soy Products

 

Nearby July soymeal slumped, as soybeans did, on profit-taking and unwinding of bull spreads before the long weekend, traders said. December soymeal closed up US$2.30 at US$313.30.

 

Soyoil closed higher. Strength in crude oil, weakness in the U.S. dollar and fund buying were seen as supportive, traders said. Funds bought an estimated 1,000 soyoil contracts and were seen as even in soymeal.

 

The CBOT will be closed Monday in observance of Memorial Day.