August 30, 2006

 

CBOT Soy Review on Tuesday: Slips into close following corn, wheat

 

 

Soy complex futures at the Chicago Board of Trade slipped into the close on Tuesday after a two-sided trade, following losses seen in corn and wheat.

 

Most-active November soybeans settled 1 cent weaker at US$5.51 a bushel. December soyoil settled down 9 points at 25.08 cents a pound. December soymeal was unchanged at US$161.70 a short tonne.

 

"All day we were drifting in and out of consciousness, going back and forth. While we ended up weaker, we could have easily ended up firmer. There was no special significance to today's trade," said Victor Lespinasse, floor broker, A.G. Edwards & Sons.

 

Modest pressure came from the slight increase in soybean condition ratings, traders said. The U.S. Department of Agriculture said late Monday 59% of the U.S. soybean crop was in good-to-excellent condition, up one percentage point from a week ago and in line with analysts' expectations of a one-to-two percentage-point increase as moisture aids development. The USDA reported 7% of the crop is dropping leaves, compared to 4% last week and the five-year average of 5%.

 

"The weather is beneficial and that's being reflected in the crop conditions," Lespinasse said.

 

Another long-time analyst concurred. "It's too late to lose this crop. We can argue about whether we gained or lost a half a bushel, but the major thing is, we're looking at a big crop," the long-time analyst said.

 

Earlier in the session soybeans saw a choppy trade, and staged some gains at midday as November held above the US$5.50 region in what some analysts deemed "a dead-cat bounce." There was little news - bullish or bearish - to sway market participants to commit to pushing the market in either direction. Funds were net buyers of 2,500 contracts.

 

In other news, the Brazilian government is studying a decree that would grant soy farmers the right to use non-certified transgenic soy varieties in the upcoming 2006-07 harvest, said an Agricultural Ministry official. Local soy farmers - especially those in the southern state of Rio Grande do Sul - are lobbying for the passage of such a decree, in order to qualify for seed financing from the state-owned Banco do Brasil, as well as for rural insurance. Local seed associations are against the move.

 

The National Corn Growers Association, or NCGA, and 10 other grain groups are urging Commodity Futures Trading Commission to continue to produce the weekly commitments of traders reports. The CFTC is reviewing the procedure. In a letter to the commission, the NCGA said the reports are important to agricultural producers and cited the need for more details within the reports. The CFTC is currently taking public comments on the matter.

 

Soybean buyers included ADM, DT Trading, Iowa Grain and Calyon each buying 200 November; Citigroup buying 600 November; Merrill Lynch buying 300 November; and Tenco buying 800 November. Sellers include Fimat selling 600 November; and JP Morgan and O'Connor each selling 400 November. Tenco bought 3,000 January US$5.60 puts.

 

 

Soy products

 

Soymeal and soyoil were weaker, with soyoil following the action in crude oil. Crude oil was lower as traders there removed the weather premium once Tropical Storm Ernesto proved to be not a threat to energy production in the Gulf of Mexico.

 

Light unwinding of meal-oil spreads helped boost soymeal, but without a rally in soybeans, soymeal's upside was limited. "There was very little going on in the products and honestly there was little going on all day in the market," the long-time analyst said.

 

Funds were light buyers in soymeal and sellers in soyoil.

 

Soymeal buyers included ADM buying 200 December; Bunge buying 200 December; Calyon buying 400 December; R.J. O'Brien buying 300 December; Rand buying 700 December; and Tenco buying 400 December. Sellers include Fimat selling 300 December; and JP Morgan selling 300 September and 200 December. Produce Grain spread 500 September-October and 300 January-May.

 

Soyoil buyers were Bunge buying 1,000 December; and Man Financial and JP Morgan each buying 200 December. Sellers include ABN Amro selling 200 September and 400 December; Citigroup selling 1,400 December; and Fimat selling 600 December.