Soyabean futures at the Chicago Board of Trade fell to a two-week low on Monday, pressured by the weakness in corn and soyabean oil markets and prospects for a bigger Brazilian soya crop, traders said.
That drove the market into technical sales by large-scale speculators. "Basically, you had two upward revisions in the Brazilian crop estimate that we saw this," said Terry Really, analyst with Citicorp.
"The fund positions are incredibly net long in beans and oil," he added. "We also blew through some stops. We saw the stops in the January soyabeans at $6.70, $189 in the meal and oil at 29.25." January soyabeans closed 17-3/4 cents lower at $6.59-1/4 per bushel nearly a 3 percent drop. The back months settled 13 to 18-1/2 cents lower.
December soyabean oil closed 0.33 cent per lb weaker at 28.90 cents and January soyaoil was 0.33 lower at 29.34. In soyameal, December was $5.10 per ton lowers at $183.30 and January was $4.70 weaker at $185.70. Volume was heavy. In soyabeans, an estimated 121,103 futures and 20,094 options traded. Soyameal trade was seen at 61,490 futures and 2,484 options.
Estimated soyaoil volume was 43,520 futures and 3,931 options. Commodity funds sold 4,000 soyabean contracts, 3,000 soyameal and 1,500 oil. The Chicago 2007 corn market closed 10 to 11-1/2 cents lower amid technical weakness. Adding to the bearish tone was talk that USDA was considering making it easier for farmers to take land out of the conservation reserve program so they can plant more corn next spring to meet demand.
USDA declined to say if it would ease stringent penalties for farmers who want to cash in on high grain prices and take land out the program. That bearish implication spilled over to soyabeans, which tend to track the moves in corn. There was generally favourable weather in South America for the start of growing season, and weaker Asian markets overnight added to the bearish tone.
Analyst Cellars estimated the 2006/07 Brazilian soyabean crop at 54.5 million tonnes, up from 53.7 million tonnes forecast in November. Brazil's vegetable oil industry association, above, estimated the country's crop at 55.2 million tonnes, up from 54.7 million in October.
Heavy December deliveries in soyameal and soyaoil added to the selling in the products. Soyaoil found additional pressure from lower energy and vegetable oil markets. There were 2,485 December soyaoil deliveries and 761 soyameal deliveries on Monday, which were met by scattered stoppers. Meal has been the weakest leg of the complex amid softer US cash markets.
USDA reported last week's export inspections of soya at 33.4 million bushels, near estimates for 27 million to 33 million. Spot basis bids for soyabeans in the Midwest were steady to firm late on Monday, underpinned by slow farmer sales as prices fell.
Trade data issued by the Commodity Futures Trading Commission on Friday showed that large speculators expanded their net longs in soyabean futures/options, while cutting their longs in soyabean oil and soyameal in the week ended November 28.
In soyabeans, large speculators increased their net longs in soyabean futures/options by roughly 10,000 lots. In soyaoil they cut their net longs in futures/options by roughly 4,600 lots but remained long by an 8:1 margin. Soyameal futures/options, large speculators trimmed their net long position by about 2,900 lots. Malaysian palm oil futures were weaker.
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