Market Recap: Soybean Futures (Source: CME)
Soybean futures came under heavy pressure today and finished low-range, with losses of 23 1/2 to 27 1/2 cents in the May through August contracts, with deferred months 9 to 15 1/4 cents lower. The fact that the soybean market again ignored fresh soybean demand news (225,000 metric tons [MT] were sold to China for combined marketing years) signals the market believes the upside has been overdone and that strong demand is already factored into prices.
Soybean Complex Market Recap (Source: CME)
July Soybeans finished down 27 1/2 at 1438 1/4, 33 off the high and 4 up from the low. November Soybeans closed down 13 at 1340 1/2. This was 7 1/4 up from the low and 20 3/4 off the high. July Soymeal closed down 9.2 at 417.3. This was 2.3 up from the low and 10.9 off the high. July Soybean Oil finished down 0.31 at 53.27, 0.7 off the high and 0.24 up from the low. Unlike the other grains, the soybean market saw aggressive long liquidation selling to drive the market sharply lower on the session as speculative sellers were active for much of the session. The market pushed slightly lower early in the session as the new buying from China was not enough to offset the negative tone from outside market forces and speculator long liquidation selling ahead of the Supply/demand report may have accelerated when the stock market took a more serious tumble. A sharp break in gold, copper and crude oil and a strong US dollar added to the bearish tone. Talk of the record high net long position from speculators as of May 1st added to the liquidation selling fears. The USDA confirmed sales of 225,000 tonnes of US soybeans to China which included 60,000 for the 2011/12 season and 165,000 for the new crop season. In addition, the USDA confirmed the sale of 40,000 tonnes of soybean oil to unknown destination for the 2012/13 season. Strength in old crop corn and wheat helped to provide some support but the dominate force of the day was speculative selling which drove July to the lowest level since April 20th and November to the lowest since April 18th.
VEGOILS-Palm oil up on bargain hunting; data eyed
SINGAPORE, May 8 (Reuters) - Malaysian palm oil futures gained, recovering from an 8-week low on Monday triggered by economic fears in the euro zone and the United States, as buying interest returned.
"The market is trying to consolidate. There was a sell down yesterday and some adjustment came in (before closing), and the market continued its recovery today," said a trader with a foreign commodities brokerage in Malaysia.
Japan 2011 soybean output down 1 pct - U.S. attache
May 7 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Japan:
"Although there is a long history of soy production in Japan, in 2011 domestic production was merely 23 percent of the volume of soy food consumption. Prospects for increased production through improved yields or other means remains limited by various factors including the lengthy rainy season, and the failure of Japanese agriculture to adopt higher biotech seeds with higher yield potential.
S.America drought seen paring world soy inventories
CHICAGO, May 7 (Reuters) - Estimates of South American soybean production continue to shrink as farmers harvest the remainder of the Southern Hemisphere crop, a factor that is driving down forecasts for U.S. and global inventories.
However, analysts expect a rebound in world soy supplies for 2012/13 on ideas that high prices will inspire South American farmers to plant aggressively in that crop year.
Soybeans Decline as European Debt Crisis Curbs Speculator Demand (Source: Bloomberg)
Soybeans dropped the most since January on concern that an intensifying European debt crisis will slow global economic growth, curbing investment demand for commodities as a hedge against inflation. The dollar extended its longest rally against the euro since 2008 as Greece faced the prospect of becoming the first developing nation to default on its debt. The prospect of slowing demand cooled soybean prices that reached a 45-month high last week as hedge funds made their largest bet on a rally in prices since at least June 2006, government data show. “The European debt crisis encouraged the funds to cut their long positions,” Chad Henderson, a market analyst for Prime Agricultural Consultants Inc. in Brookfield, Wisconsin, said in a telephone interview. “People are nervous about demand after the rally.”
Soybean futures for July delivery fell 1.9 percent to close at $14.3775 a bushel at 1:15 p.m. on the Chicago Board of Trade, the largest decline since Jan. 30. On May 2, the most-active futures touched $15.125, the highest since July 2008. Soybeans are the second-largest U.S. crop, valued at $38.9 billion in 2010, behind corn, government data show.
Soy-Crop Bust Spurs China to Drain U.S. Bins: Commodities (Source: Bloomberg)
U.S. soybean stockpiles are poised to drop to the lowest relative to consumption since at least 1965 after the worst drought in five decades decimated crops across South America, driving China to buy more from Midwest farmers. Inventories will decline 20 percent to 172 million bushels (4.68 million metric tons) before next year’s harvest in the U.S., the largest grower, according to the average of 31 analyst estimates compiled by Bloomberg. This year’s 19 percent rally may extend another 11 percent by the end of June to $16 a bushel, according to Linn Group, a brokerage and researcher based in Chicago. Prices reached a record $16.3675 in 2008. The U.S. Department of Agriculture cut its forecasts for the South American crop four times in as many months after predicting record supplies as recently as December. The estimates are scheduled to be updated May 10.
Imports by China, where demand doubled since 2004, will advance to a record 55 million tons this year as farmers feed a hog herd expanding 4.4 percent to a record 690 million animals, USDA data show. “Prices may top the 2008 peak if Chinese demand doesn’t slow or there are any threats to the U.S. crop this summer,” said Christopher Narayanan, the head of agricultural commodities research for Societe Generale in New York. “China’s soybean imports have grown at a rate of more than 17 percent annually the last 10 years, and the biggest risk is that demand won’t slow.”
Anticipation over declining crude palm oil (CPO) production due to ageing plantations in major producing countries including Malaysia, would likely bolster the commodity to hit RM4,000 per tonne by second half this year, according to industry players. Malaysian Estate Owners Association president Boon Weng Siew who pegged the country's total planted area with palm trees of over 20 years old to between 30% and 40%, said many of the ageing palm trees in Malaysia were mostly under the smallholders' holdings. Smallholders contributed 52% of total CPO production while the rest was from large plantation companies, according to National Association of Smallholders. "It was difficult to persuade them [to carry out replanting] especially with the CPO price trading above RM2,000 per tonne over the past three to four years", said Boon. (StarBiz)
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