October 30, 2009

First notice day for November Chicago Board of Trade soy futures Friday (October 30) is not expected to produce any deliveries, analysts said.

Analysts expect no deliveries against CBOT November soy contracts on first notice day, but traders leave the door open for a token few to be released. As of 5 p.m. EDT Wednesday, zero soybean contracts were registered for delivery at CBOT-approved warehouses.

Tight inventories, with solid export and domestic crusher demand and uncertainty surrounding the quality of new crop soy from the Delta, are expected to keep supplies in firm hands on first notice day.

"Everything coming out of the fields is being sucked up by exports, and with cash premiums as high as 25 cents over the board price in central Illinois and along the river, it does not bode well for receipt holders to expose supplies to the delivery process," said Dan Basse, president of AgResource Co. in Chicago.

"In a normal year where the cash pipeline would be restocked, things would be different, but due to harvest delays, supplies remain tight and there are reports that 31 to 33 vessels are waiting for loading at the Louisiana Gulf," Basse added.

The soy pipeline has not been filled, and with processors having trouble producing high pro meal due to lower quality beans from the Delta and exporters bidding up prices, the risk is too great to expose receipts to delivery, a CBOT cash connected floor broker said.

The November/January spread is trading at 3-cent carry at 1:16 EDT Thursday, and the November/March spread is trading at a 1 1/2 carry.

"We are still looking at a strong demand period, and with the market facing its slowest harvest pace since 1984-85, the small carry in the market suggest light deliveries," said Bill Nelson, analyst with Doane Advisory Service in St. Louis.