Soya slides to contract lows as CIF weakens

03 Feb, 2005

Soybean futures at the Chicago Board of Trade sank to contract lows on Tuesday, following a sharp decline in the CIF market at the US Gulf, traders said. The nearby CBOT soybean and meal spreads weakened as the CIF market fell. Eventually, sell-stops were hit in March soybeans after the contract slipped past its previous contract low of $5.08-1/2.
March soybeans closed 7-3/4 cents lower at $5.07, after spending most of the session higher on a short-covering bounce. Also supportive early was a lack of rain in Brazil's No. 3 soy state of Rio Grande do Sul, which has been dry this year, traders said.
The March/May spread closed even - in contrast to the past week, when March soybeans consistently closed at a 1- to 2-cent premium to May due to the firm cash market.
Cash markets remain underpinned by a lack of farmer sales, both in the United States and South America. But a slowdown in fresh export business eased cash market levels, CIF dealers said.
CIF soybean bids were down about 6 to 10 cents by the midsession, traders said. River bean bids also backed off, they said.
"It wasn't so much you had selling. It was the bids started to back away," said Roy Huckabay, an analyst with The Linn Group, a Chicago trading firm.
"I've been expecting more movement out of South America and I think they have their backs against the wall. But they haven't sold much to date," Huckabay added.
China remains the top US customer of soybeans. But, by late February, Chinese demand for soybeans should switch to South America as freshly harvested Brazilian and Argentine beans move into marketing channels.
Commercials were bear spreading May/March, with Term Commodities and Iowa Grain among the spreaders, traders said.
Soymeal futures closed weaker, with March leading the market lower amid steady to weaker US cash markets.
Buying demand for cash soymeal was waning and there were outlooks that processors could see more beans move their way if exporters continue backing off their bids, traders said.
March soymeal closed $1.10 lower at $152.70 per ton. The deferreds settled 80 cents lower to 20 cents higher, with several of the back months making new contract lows.
The soyoil market dived to contract lows across the board late, with prices grinding lower when soybeans and soymeal weakened.

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