June 2, 2008

 

ASA weekly: US soy sharply lower as petroleum market declines
 
 

The US soy complex closed lower on May 29 due to a sharp decline in the petroleum markets which reduced biodiesel breakeven support for soy oil to around 60 cents per pound.

 

The drop in petroleum markets came after speculative money flowing out of commodities as month's end approached and news that CFTC has increased its surveillance of the energy markets.

 

Concerns that the halt of speculative money from commodities present a near-term bearish risk for the market, analysts said.

 

However, if nothing has changed in the underlying fundamentals and there is no evidence that supply is catching up with demand, commodity prices will have to quickly rebound to balance supply and demand. 

 

July soy futures closed down US$18.37, finishing at US$486.02; August lost US$17.45, closing at US$488.04; and September was down US$14.79, ending at US$485.75.

 

July soymeal decreased US$13.12 closing at US$365.74; August was US$12.35 lower, finishing at US$368.83; and September meal closed down US$9.59, ending at US$367.40.

 

July soy oil decreased US$51.81 to finish at US$1329.37; August was down US$51.37, closing at US$1337.09; and September was US$51.37 lower, closing at US$1344.37.

CFTC to closely scrutinize index funds trading

 

The Commodity Futures Trading Commission (CFTC) announced last week a closer scrutiny of index funds trading.

 

Walt Lukken, CFTC acting chairman, said investors flooded into commodities after a credit crisis hit financial markets last summer and risky bond investments lost popularity.

 

Lukken stressed that the CFTC's move to require more information from institutional investors is separate from any probes into illegal trading activity.

 

CFTC's chief economist testified to the Senate last week that CFTC data on large traders shows that price increases in commodities are largely unrelated to fund trading.

 

Meanwhile, in response to growing concerns about the role speculators may be playing in driving up oil prices, the CFTC said it will require energy traders to begin providing more information so the government can better assess what effect they may be having on the markets.

 

The commission said it would require energy traders to provide monthly reports on their index trading to help the CFTC further identify the amount and impact of this type of trading.

U.S. & South America Soybean/Products Balance
	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	2005/06	2006/07	2007/08	2005/06	2006/07	2007/08	2005/06	2006/07	2007/08
Soybeans	thousand tonnes
Carryin	6,960	12,229	15,617	174	334	185	1,638	2,252	3,851
Production	83,368	86,770	70,358	40,500	48,800	47,000	57,000	59,000	61,000
Imports	92	246	163	1,013	2,359	2,600	40	108	130
Crush	47,324	49,160	49,941	32,748	37,600	38,100	28,756	30,770	31,800
Exports	25,579	30,428	27,896	7,130	12,208	10,000	24,770	23,805	27,900
Other	5,288	4,040	4,495	1,475	1,500	1,525	2,900	2,934	2,950
Usage	78,191	83,628	82,332	41,353	51,308	49,625	56,426	57,509	62,650
Carryout	12,229	15,617	3,806	334	185	160	2,252	3,851	2,331
Soymeal	thousand tonnes
Carryin	156	285	318	1,686	2,003	2,076	636	863	1,013
Production	37,416	39,033	39,720	25,582	29,153	29,550	22,300	23,850	24,615
Domestic use	30,114	31,171	32,024	574	620	645	10,000	11,500	12,000
Net Exports	7,173	7,829	7,743	24,691	28,460	29,164	12,073	12,200	12,713
Usage	37,287	39,000	39,767	25,265	29,080	29,809	22,073	23,700	24,713
Carryout	285	318	271	2,003	2,076	1,817	863	1,013	915
Soybean oil	thousand tonnes
Carryin	771	1,366	1,317	385	487	350	248	300	301
Production	9,248	9,292	9,614	6,169	7,200	7,320	5,521	5,910	6,105
Domestic use	8,146	8,502	8,573	402	597	1,135	3,172	3,450	3,640
Net exports	507	839	1,071	5,665	6,740	6,160	2,297	2,459	2,450
Usage	8,653	9,341	9,644	6,067	7,337	7,295	5,469	5,909	6,090
Carryout	1,366	1,317	1,287	487	350	375	300	301	316

USDA Export Sales (tmt) - Week of 22 May 2008
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Canada	Soybeans	1.20	124.20		Panama	Soymeal	0.90	96.00
China	Soybeans	73.30	18879.20		Philippines	Soymeal	5.90	408.80
Indonesia	Soybeans	6.30	879.80		Russia	Soymeal	13.70	21.20
Israel	Soybeans	7.70	294.20		Venezuela	Soymeal	41.90	260.50
Japan	Soybeans	77.10	2134.50		Barbados	Soyoil	0.80	1.10
Malaysia	Soybeans	1.50	65.90		Canada	Soyoil	0.90	25.00
Mexico	Soybeans	34.50	2723.90		Mexico	Soyoil	1.40	92.30
Taiwan	Soybeans	19.60	1440.50
Canada	Soymeal	10.10	875.00		Export Sales Totals (tmt)
Guatemala	Soymeal	4.20	184.00		Commodity	Outstanding Sales	Accum. Exports	New Sales
Indonesia	Soymeal	1.10	85.10		Soybeans	3,574.60	26,141.20	245.70
Japan	Soymeal	2.20	213.20		Soymeal	1,312.70	5,133.30	110.00
Mexico	Soymeal	6.70	768.90		Soyoil	137.00	868.50	-0.30