August 29, 2008
CBOT September soy, soymeal deliveries seen light; soyoil large
Deliveries against the Chicago Board of Trade September soy and soymeal contracts on first notice day Friday are expected to remain light, while hefty soyoil notices are anticipated, analysts said.
Analysts expect deliveries against the CBOT September soy contract to fall in a range of zero to 200 lots, with most analysts leaning toward a range of zero to 100 lots. Soymeal deliveries are seen between zero and 200 lots, while soyoil delivery notices are expected in a range of 1,000 to 4,000 contracts. As of 5 p.m. EDT Wednesday, 551 soy contracts, 13,171 soyoil contracts and 160 soymeal contracts were registered for delivery at CBOT-approved warehouses.
The overall supply of old-crop soy is getting tighter and tighter, and with inventories in firm hands, analysts see receipt holders unwilling to lose ownership, said Don Roose, president of US Commodities Inc. in West Des Moines, Iowa.
Currently 438 receipts are registered in the Chicago area, and most of those beans are spoken for by domestic processors, leaving just 113 receipts along the river candidates to come out, a cash-connected CBOT floor broker said.
"I only know of three receipts that are coming out, as the cash market doesn't justify exposing receipts to the delivery process, as they will definitely be picked up," he added.
Sid Love, analyst with Kropf/Love Consulting, said September soy deliveries will probably be nonexistent on first notice day because he is hearing that cash beans are quoted at $1 a bushel above futures at the Gulf.
"My goodness, if it's really US$1 over at the Gulf, that would indicate that supplies are pretty tight right now," Love said.
The September/November spread was trading at a 9-cent inverse at 12:32 p.m. EDT Thursday.
Soymeal is faced with a tight supply situation similar to soy and that should limit deliveries, analysts said.
The cash soymeal market is trading above delivery value in the eastern Midwest and near delivery value in the west, leaving little incentive to expose receipts, analysts said.
The widening of the nearby September/October spread illustrates the tightness of supplies. The nearby inverse spread has widened in the past week, moving from a $3 inverse to a $6 inverse, traders said. The September/October spread was trading at an $8.30 inverse at 12:40 p.m. EDT.
Meanwhile, a surplus of world vegoils, slower domestic food use and declining demand from the biodiesel industry open the door for holders of receipts to put out a large quantity once again, traders said.
Nevertheless, soyoil deliveries remain the wild card, traders and analysts said. With 13,171 contracts registered for delivery and supplies in good hands, it's tough to figure just how many receipts could be put out, analysts said. The majority of soyoil stocks are in eastern Iowa, with 3,996 lots registered in Ackley, Iowa, and in Volga, S.D., with 3,088 lots registered.
