October 13, 2007

 

CBOT Soy Review on Friday: Lower; USDA data lacks bullish surprise

 

 

Chicago Board of Trade soybean futures ended lower Friday, succumbing to speculative and commercial selling amid the absence of a bullish surprise in the U.S. Department of Agriculture's crop reports.

 

November soybeans settled 4 3/4 cents lower at US$9.76 3/4 and January soybeans ended 5 3/4 cents lower at US$9.95 1/4. December soymeal settled US$0.80 higher at US$278.90. December soyoil finished 44 points lower at 39.53.

 

The USDA's reports that featured smaller 2007 acreage and unchanged ending stock projections were nothing to get excited about, particularly with prices hovering near US$10.00 per bushel level, said Dan Basse, president AgResource Company in Chicago.

 

You really have to get some special news or inputs to rally prices at these levels, he added.

 

The market had rallied leading up to Friday's crop report on bullish outlooks, and many traders were looking to sell price strength amid ideas the supportive data were previously priced in the market, analysts said.

 

Traders were said to be taking a careful approach, as a change to a wet pattern in northern Brazil would entice traders into reducing some risk premium, eliminating another bullish market feature, analysts added.

 

Technical strength was an early underpinning feature, with the market satisfying a near-term upside objective of filling a gap up to US$9.90 1/2 basis November futures, which is the top of this month's big downside price gap on the daily bar chart.

 

However, the market failed to sustain those advances, with spillover weakness from wheat futures helping pin prices in negative territory down the stretch, traders said. Nevertheless, bullish long-range fundamentals remain supportive features to limit downside risks moving forward, traders added.

 

The USDA pegged 2007-08 soybean production at 2.598 billion bushels versus the average of trade estimates at 2.648 billion. Soybean yield is projected at 41.4 bushels per acre, unchanged from the September yield. The projection was down 1.3 bushels from 2006's yield and below the average of trade estimate at 41.9.

 

The soybean crush rate for September in the National Oilseed Processors Association's monthly soybean crush report is expected to decline to about 136.7 million bushels from the previous report, according to a survey of industry analysts. NOPA soyoil stocks in September are expected to decline by 113 million pounds to 2.589 billion pounds from the 2.702 billion reported in August. NOPA's report is scheduled to be released Monday at 8:30 a.m. EDT (1230 GMT).

 

In pit trades, ADM Investor Services bought 400 January and Fimat bought 500 November. ADM Investor Services, Penson GHCO and MF Global each sold 500 November, and FCStonnee sold 400 November. Speculative funds were estimated sellers of 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil backpedaling in step with soybeans. Soyoil futures came under pressure from speculative selling, with a sizable increase in old- and new-crop ending stocks in the USDA's crop report applying fundamental pressure, analysts said.

 

Soymeal futures managed to divorce themselves from weakness in the rest of the complex, benefiting from meal/oil spreading and higher-than-expected weekly export sales, analysts said.

 

December oil share ended at 41.48% and the November/December crush ended at 71 3/4 cents.

 

In soymeal trades, Citigroup and Rosenthal each sold 300 December. Bunge Chicago sold 300 December and 300 July, JP Morgan sold 400 December. Speculative fund buying was estimated at 1,000 lots.

 

In soyoil trades, JP Morgan and Tenco each bought 300 December. ADM Investor Services sold 300 December and 300 January, and Iowa Grain sold 300 December. Speculative fund selling was estimated at 1,000 lots.