August 22, 2006

 

CBOT Soy Review on Monday: Mixed, soybeans, oil firmer on light buys

 

 

Soy complex futures at the Chicago Board of Trade ended mixed on Monday, with soybeans and soyoil firmer, while soymeal sank after a quiet day of light short covering and buying on ideas the market is oversold.

 

Most-active November soybeans settled 3/4 cent firmer at US$5.61 1/4 a bushel. December soyoil settled up 31 points at 25.76 cents a pound. December soymeal lost 30 cents to US$161.80 a short tonne.

 

It was a quiet session for soybeans, which traded both sides of unchanged, but generally held to the north side of steady. Light strength in corn and wheat, and a lack of fund selling help to underpin soybeans, traders said.

 

After last week's losses, some investors stepped in buy on ideas the market was oversold.

 

"These markets just don't have a lot to go on. And if you look at the markets and what they did (Monday) in the grand scheme of things it didn't do anything," said Jim Smitherman Harvest Trading Group, LLC, Austin, Texas.

 

Market participants were also watching for news out of the 2006 John Deere/Pro Farmer Midwest crop tour, but the early results didn't have much impact, analysts said.

 

Soybeans so far are better-than-expected even with the weather stress in South Dakota said one group of crop scouts on the western leg of the tour. Overall, for soybeans, the crops looked relatively good, scouts said, noting that recent rains have helped the bean crop during its critical stages of development. Crop scouts covered an area from Sioux Falls, S.D. and will end up Grand Island, Neb., Monday.

 

In the eastern half of the tour, soybean crops were deemed "average" in western Ohio. Scouts on one route of the tour, had evaluated 10 soybean fields in northern Ohio, finding somewhat reduced soybean pod counts compared to fields seen on a similar tour route in 2005. The scouts will meet in Anderson, Ind., Monday evening.

 

The U.S. Department of Agriculture currently predicts a 2006 U.S. soybean crop of 2.928 billion bushels, representing a decline of 5.2% from last year.

 

Smitherman said the question for soybean traders remains whether or not USDA went out on a limb and estimated the U.S. soybean crop on the high side of potential production or if this crop as room to grow. The market was surprised after the August crop production report estimated the soybean crop at 2.928 billion bushels.

 

After underestimating the soybean crop size in recent years, some analysts believe this year's soybean crop estimate at the beginning of harvest might be closer to the final figure. "I side on the idea that we won't see a big jump in crop size, but that doesn't mean prices are going to go up in a big way," Smitherman said.

 

He said if November soybeans could find further support, the market could drift to US$5.70, but is likely to have a hard time holding above US$5.85.

 

In other news, the USDA reported 12.358 million bushels of soybeans were inspected for export in the week ended Aug. 17. The export figure is up 83.6% from the previous week's 6.730 million bushels. Analysts surveyed by Dow Jones anticipated soy inspections in the range of 12 million to 17 million bushels.

 

Soybean buyers include ABN Amro and Fimat each buying 200 November; Man Financial buying 300 November; J.P. Morgan buying 100 November. Sellers include Rand and Stern each selling 200 November.

 

 

Soy products

 

Soy products ended mixed, with soymeal weaker and soyoil firmer.

 

Soymeal was mixed on Monday, trading both sides of steady. Funds were light net sellers and the market fell under modest spreading pressure as speculators bid up soyoil. Soyoil gained on strength in crude oil as investors bought soyoil on its role in biodiesel.

 

In soymeal, Bunge and JP Morgan bought 200 December. Sellers include RJ O'Brien selling 200 December. Spreaders include JP Morgan spreading 300 September-December; Iowa Grain spread 400 December-September.

 

In soyoil ADM bought 200 September; Bunge sold 100 December and 100 September; Fimat bought 400 December, JP Morgan bought 200 September; Prudential buying 200 December; Rand buying 200 December and 200 October. Sellers were scattered. Spreaders include ABN Amro spreading 200 September-January and Citigroup spreading 300 December-September.