Soyabean futures at the Chicago Board of Trade closed lower on Tuesday amid a weaker cash market at the US Gulf Coast and outlooks for world soyabean supplies to grow, traders said. Expectations that the government could report a record December 1 world stocks number on Wednesday in its monthly crop report cast a bearish tone to the session, traders said. The combination of the 2004 record US soyabean harvest and prospects that South America will grow a huge crop this year were seen adding to bean supplies.
Soyabean futures closed 2-1/2 to 6 cents per bushel lower. January settled 2-1/2 cents down at $5.57-1/2 cents, coming off its lows late in the session as firms exited positions before its last trading day on Friday.
March soyabeans closed 5-1/4 lower at $5.43-1/4. Funds were net sellers of roughly 2,000 lots. Commercials were on both sides. "Even though the US is using up their beans a little faster than I thought, the crops in South America look great," said Roy Huckabay, an analyst with The Linn Group, a Chicago-based trading firm.
"At some point China is going to shut off these imports. They're doing 2.5 million tonnes a month. we'll wake up one day and China is going to say 'I'm not buying any more beans for a while,'" he said.
The CIF soyabean market at the Gulf of Mexico weakened on Tuesday, reflecting recent farmer bean sales as CBOT futures rallied the past week. There was also talk that top bean buyer China rolled some US soyabean purchases for later shipment.
Export activity overnight was viewed as routine, with South Korea buying 52,500 tonnes of US soyabeans. March soyabeans hit a high on Tuesday of $5.51 a jump of 26-1/2 cents since its 2005 low a week ago.
A combination of firm cash markets and index fund buying since the beginning of the year sparked the recent rally in beans. Commodity index funds have been big buyers of CBOT agricultural contracts the past week as they changed the weighting of their index, allocating more money to agricultural products, traders said.
"It's hard to find much news that's friendly, but there's still people waiting for the (index) funds to finish their New Year buying," one CBOT floor broker said. There were no January deliveries on Tuesday and registrations with the CBOT were unchanged at two lots.
Soyameal futures turned down late in the session, eventually dragged lower by the weakness in soyabeans. However, soyameal was supported most of the session by continued technical buying by commodity funds.
The meal market closed 10 cents higher to $1.70 per ton lower, with January up 10 cents at $167 and March down $1.30 at $165.20. Funds bought 3,000 to 3,500 meal contracts. Commercials were sellers.
There were no January meal deliveries on Tuesday. Soyaoil futures closed mostly lower, down 0.30 cent per lb. to up 0.02 cent. Both front months settled 0.30 cent weaker, with January at 19.82 cents and March at 19.97.
Commercial deliveries on the January contract weighed on prices, along with a lower close in Malaysian palm oil futures overnight. There were 194 deliveries on the January oil contract.
The Bungle house account delivered them all. The key stopper was a Tenneco customer taking 108 lots. CBOT oil registrations increased late on Monday to 2,295 lots from 2,101.
Export news featured Iran tendering to buy 15,000 tonnes of Malaysian palm oil.
The drop in soyaoil prices came despite the US Census Bureau reporting smaller US soyaoil stocks in November compared with October, and a downward revision in its October soyaoil stocks.
Estimated volume was moderate. In soyabeans, an estimated 60,626 futures and 22,176 options traded. Soyameal trade was seen at 31,313 futures and 3,617 options. Estimated soyaoil trade was 24,458 futures and 1,410 options.