November 11, 2005

 

CBOT Soy Review on Thursday: End down, but off early lows

 

 

Soybean futures on the Chicago Board of Trade ended modestly lower Thursday, but well off earlier lows, as borrowed strength from soymeal and technical buying helped trim losses.

 

November soybeans ended 1 1/4 cent lower at US$5.77, January soybeans finished 1 cent lower at US$5.87 1/2, December soymeal settled US$1.20 higher at US$175.50 a short tonne, while December soyoil ended 19 points lower at 22.77 cent a pound.

 

The bearish influence of large production and ending stock forecasts from the U.S. Department of Agriculture put the defensive theme in motion, but the market's inability to generate any strong downward momentum attracted buying to bounce futures off their lows, said a CBOT commission broker.

 

The market received a late boost from a technical bounce in soymeal, with buying accelerating once futures breached resistance at the January contract's 50-day moving average. Market rumblings of China buying U.S. soybean supplies added mild support to prices as well.

 

Traders said the USDA's crop data served as confirmation for pre report trade perceptions and failed to attract enough selling to break the market out of its recent trading range. Futures essentially made a price adjustment and change market outlooks from ample supplies in 2005-06 from thoughts of adequate inventories.

 

The USDA's data effectively takes the need for added South American weather premium from the market in the near term, but doesn't present enough comfort to pull the legs from under the market, traders added.

 

USDA reported 2005-06 production at 3.043 billion bushels up 76 million bushels from October's forecast, and yields were raised to 42.7 bushels per acre from 41.6 estimated in October. The USDA projected 2005-06 U.S. ending stocks at 350 million bushels, above the average trade estimate of 313 million.

 

In pit trades, Bunge Chicago, RJ O'Brien and Rand Financial each bought 300 January, Calyon Financial bought 500 January and Fimat bought 400 January. Man Financial sold 600 January, RJ O'Brien sold 800 January, with Calyon Financial, Fimat, Prudential Financial and Tenco featured sellers. Commodity fund selling was estimated at 2,000 contracts.

 

South American soybean futures ended mixed. The March futures settled unchanged at US$6.18.

 

 

SOY PRODUCTS

 

Soymeal futures ended higher in nearby contracts, bolstered by technical buying, soy product spreading and optimistic outlooks for the market amid the lack of any change in the USDA's ending stock projection despite higher production outlooks, traders said.

 

Soyoil futures stumbled lower, dropping to six week lows during the session, pressured by speculative selling, corrections in the soymeal/soyoil spread and bearishly perceived stocks data from the USDA. Underlying commercial buying helped keep a floor under prices, traders added.

 

The USDA's soyoil production forecast is now increased to 19.435 billion pounds, up from the 19.155 billion pounds predicted in October. Soyoil beginning and ending stocks were raised by 120 million pounds and 250 million pounds, respectively. Mild support was attributed to Soyoil usage being raised 150 million pounds to 19.300 billion. The increase in soyoil usage is attributed to expected increases in biodiesel production. A much larger than expected weekly export sales figure added support as well.

 

December oil share fell to 39.35%, and the November/December crush was at 59 1/2 cents.

 

In soymeal trades, Rand Financial was featured buying, with further buying scattered among various firms. Fimat was a seller of 1,100 March with Cargill and Prudential Financial noted sellers.

 

In soyoil trades, ADM Investor Services and Iowa Grain each bought 300 December, Bunge Chicago bought 300 December and 700 January, Cargill bought 300 December and 500 January, Fimat bought 600 December, 600 January and 1,000 March, Tenco bought 700 December and 600 January. Bunge Chicago sold 800 December, Iowa Grain sold 1,000 March, ABN Amro sold 400 January, Man Financial sold 300 January, O'Connor sold 400 December and RJ O'Brien sold 600 December.