Soyabean futures at the Chicago Board of Trade sank on Monday as traders were rattled by the US Agriculture Department's bigger-than-expected soya crop estimate released before the open. "The crop is bigger than what most people were expecting.
Now it's going to be a matter of just how big does the market think the crop is," said Randy Mittelstaedt, analyst with RJ O'Brien, a Chicago trade house.
"We could see the market move down here over the next couple weeks.
Today is the shock value. With that new line of thinking in place, you'd probably see the $6 level provide overhead resistance," Mittelstaedt added.
September soyabeans fell 10-1/2 cents per bushel to $5.70 by 11:05 am CDT (1605 GMT). New-crop November was 9-1/4 cents lower at $5.80-3/4. November found support around $6 over the past week, but slipped below that level during on Friday's late sell-off.
That continued on Monday on USDA data viewed bearish. USDA projected the 2005 US soya crop at 2.856 billion bushels, above the government's August estimate for 2.791 billion and an average of analysts' estimates for 2.814 billion.
The bigger crop spilled over to a larger US 2005/06-soya end stocks estimate, now projected at 205 million bushels. In August, USDA forecast new-crop end stocks at 180 million bushels.
US 2004/05 end stocks fell 5 million bushels to 295 million. Analysts expected the drop to reflect a strong US crush pace. Midwest cash basis bids for soyabeans were mostly steady to weaker on Monday.
A slowed export pace due to the problems with shipping supplies out of Gulf Coast ports after Hurricane Quatrain and a step-up in harvest movement pressured basis levels at several locations, dealers said.
USDA reported on Monday that 3.971 million bushels of US soyabeans were inspected for export last week, down significantly from a year ago when 10.6 million bushels were inspected during the first week in September.
Most of the soyabeans, or 2.2 million bushels, were shipped out of the Pacific Northwest.
In overnight export business, Seoul that Asian importers were seeking soya, but there were concerns prices may rise due to the impact of Hurricane Quatrain at US Gulf export markets.
Deliveries on the September contract totalled 49 lots and the Term Commodities house account stopped them all. Registrations with the CBOT sagged to 1,020 lots from the previous 1,148 late on Friday.
Meteorlogix weather service on Monday said there was no cold weather in sight for the US Midwest. The weekend was mostly dry, with scattered showers expected in the western belt during on Monday and Tuesday.
The eastern belt would be most dry this week. The soyameal market followed the weakness in soyabeans.
Added pressure stemmed from another 91 futures deliveries posted against the September contract on Monday. The futures deliveries underscored soft US cash markets amid weak demand.
A Honing customer was the key stopper of 82 lots. Soyameal registrations with the CBOT were unchanged at 200 lots late on Friday. USDA left its 2005/06 US soyameal stocks estimate unchanged at 250,000 tons.
CBOT September soyameal was down $2.90 per ton at $177.50 and trading at a $1 discount to October, which was down $3.10 at $178.60. CBOT soyaoil futures fell on slipover pressure from soyabeans.
Also bearish was USDA raising its new-crop US soyaoil stocks estimate by 100 million lbs. to 1.6 billion and more deliveries against the September contract.
Their 581 lots posted on Monday but they were met by strong stopping, with the ADM house account taking 441 lots. Registrations with the CBOT were unchanged at 3,828.
CBOT September soyaoil was down 0.29 cent per lb. at 21.88 cents. The back months were 0.15 to 0.30 cent lower. Malaysian palm oil futures closed lower overnight.
Traders in Kuala Lumpur said palm sagged amid bearish crop and export numbers. Large speculators remained net long in CBOT soyabean, soyameal and soyaoil futures during the week ended September 6, with little change to their net positions.