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James Bull
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Posting #1: Fri Feb 1st, 2008 16:55 |
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Pre-Opening Soy Complex Market Report for 2/1/2008
March soybeans traded 10 cents higher overnight. Malaysian palm oil markets were closed for a national holiday today. Indonesia was lower on weak demand following government measures to reduce food inflation. Gold is sharply higher.
Somewhat bearish crop weather in South America is competing against strong old crop demand for soybean oil and meal in the US as the major market factors this morning according to floor traders. Snowy weather across a broad swath of the soybean belt in the US may hamper farmer selling today and into the weekend, and this is also being viewed as somewhat supportive. Strong closes in the soybean complex yesterday came on improved volume. Some traders indicate that this was fueled in part by end-of-month evening up. News is very light this morning with no new tenders scheduled. Severe winter weather in China is still a major factor there from a social and economic standpoint, particularly in light of power failures brought on by downed power lines. However, most of the potential damage to rapeseed is probably done at this point, according to local sources. The greatest losses in terms of food production are in the areas of fruit, vegetables and meat, and some traders are already speculating that the winter storms and the approach of the Beijing Olympics will result in strong Chinese imports of meat and vegetable oils in coming months. Bird flu news is on the rise in Asia, but the market still seems to believe the current impact on feed usage is minimal. Expanding poultry production in the US is helping to keep meal demand firm.
Forecasters are taking hot temperatures out of the picture for Argentina over the next 7 days. Scattered rains are expected in central growing areas there, all of which should slightly improve crop prospects. Scattered showers are forecast in southern Brazil, which will help crops. Continued wetness in central growing areas will not. Basis levels were steady to weak yesterday at the Gulf, based in part on a shortage of barges and the higher barge freight rates that resulted. No new tenders are scheduled today.
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James Bull
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Posting #2: Mon Feb 4th, 2008 22:32 |
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Pre-Opening Soy Complex Market Report for 2/4/2008
March soybeans traded 12 3/4 cents higher overnight. Malaysian palm oil was 3.7% higher, finishing just off the record high. Indonesia was also higher with a resumption of good demand. Gold and crude are lower.
Higher palm oil markets and the strong demand for products seen on last week's Export Sales Report are seen by traders as factors that continued to support prices overnight. China is battling the coldest winter in 100 years in two provinces, according to local officials, and some traders also see this as a supportive factor. Officials in Indonesia announced that they plan to impose an export tax of either 20-25 percent on crude palm oil and products if prices reach $1,200 and $1,300 per ton respectively. This is another in the worldwide series of steps taken by national governments to curb inflation. The Commitments of Traders Report with option showed that index and trend following funds increased their long positions by a combined total of well over 8,000 contracts last week. Non-reportable traders, however, increased their large net short position in soybeans by 2,491 contracts to 39,460, and commercials were net sellers. Commercials were large buyers in the products of 8,597 contracts in meal and 9,502 contracts in oil. Non-reportable traders were small net sellers in meal and moderate net sellers in oil. The latest round of bird flu outbreaks now includes a new outbreak in Pakistan, a woman's death in Indonesia and an apparent loss of control by health officials in Bangladesh where the virus has spread to 36 of the country's 64 districts. Moderate weather in the US and continued light farmer selling in soybeans are being reported this morning. Brazil exported 599,000 tonnes of soybeans in January, which is up from 528,500 tonnes the previous year and up from 528,800 tonnes the previous month.
Forecasters continue to call for cooler temperatures and scattered rain across much of Argentina over the next 7 days, which will continue to reduce stress to the soybean crop there. Central growing areas of Brazil continue to see heavy rain forecasts, which should continue to interfere with late development and harvest. Analysts in China now indicate that recent snows (added moisture) may benefit the rapeseed crop there in areas where plants were not killed outright by frost. It is still too early to know the effect on overall production. Basis levels were steady last week at the Gulf, with a weaker tone based in part on higher barge freight rates. No new tenders so far today.
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James Bull
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Posting #3: Wed Feb 6th, 2008 02:07 |
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Pre-Opening Soy Complex Market Report for 2/5/2008
March soybeans traded 8 3/4 cents lower overnight. Malaysian palm oil was 3.4% higher overnight (up 113), easily exceeding its old record price but closed just 4 points higher. The dollar is sharply higher and gold is sharply lower.
Strong export demand for soybeans and products, fund buying and a slow harvest pace in Brazil are factors being sighted today as supportive. Continued rains in Mato Grosso and Goias in Brazil should continue to delay harvest there and possibly generate quality issues. The new all-time high overnight in Malaysia is also viewed as a positive factor by many traders in the US and in Asia, but some traders are concerned about the long term slowdown in export demand in Malaysia which is resulting in rising stocks of palm oil. Malaysian palm oil exports were down sharply in January, and demand has remained on the light side so far in February. The palm oil market will be closed on Thursday and Friday for the New Year. The Indonesian agricultural ministry said today that this year's exports of crude palm oil will hit 12-13 million tons compared to 11.1 million tons last year. Indonesia's previous announcement that they plan to impose an export tax of either 20-25 percent on crude palm oil and products if prices reach $1,200 and $1,300 per ton respectively is causing concerns about supply. The USDA will issue its latest Supply/Demand Report on Friday. Traders are expecting an upward revision in soybean oil exports, which could tighten the ending stocks projection. In addition, traders will keep a close eye on South American production forecasts. In the last report, the USDA lowered Brazil production to 60.5 million tonnes from 62.0 the previous month and left Argentina production at 47 million tonnes from 47.2 million last year.
Forecasters have a more mixed outlook for Argentina, with hot and dry weather expected today and tomorrow with even hotter temperatures on Thursday. However, cooler temperatures and increased chance of T-storms are likely into the weekend. Heavy rains continue in Mato Grosso and Goias with increasing shower activity in southern growing areas into the weekend. Basis levels were steady yesterday with barge freight rates remaining high.
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The only thing we learn from financial history is that we learn nothing from it!
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James Bull
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Posting #4: Thu Feb 7th, 2008 10:14 |
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Pre-Opening Soy Complex Market Report for 2/6/2008
March soybeans traded 15 cents higher overnight. Malaysian palm oil was higher again overnight but pulled back from the highs into the close. Markets are closed in Asia on Thursday and Friday for the lunar New Year. Gold is higher.
Traders this morning are commenting that the soybean complex may have followed wheat and uncoupled itself from the bearishness in stocks that has been brought on by a slowing US economy. Prices for palm oil were higher again today, and traders there continue to point to expectations of strong export demand, but actual demand for the past 5-6 weeks has been rather poor and stocks of crude palm oil continue to grow. Some of the expectations of improved demand for Malaysian palm oil stem from Indonesia's plans to raise export taxes on their crude palm oil and palm products by 20-25%, which should tighten overall export supplies somewhat. This tax increase would be triggered by higher prices. Also, palm oil is getting cheaper relative to soybean oil. Continued rains in Mato Grosso and Goias in Brazil are causing quality concerns for the developing soybean crop, but the forecast for the next several days is drier. Heavier rains may shift to the south to Rio Grande do Sul in coming days where they will be beneficial. In general, South American crop weather is a bit more favorable than has been the case in recent days. India officials believe the cold air problems with the rapeseed crop in northern growing areas will only be a minor problem and that production will be near 5.4-5.5 million tonnes, which is down from near 6.0 million last year due to lower plantings. The USDA will issue its latest Supply/Demand Report on Friday, and traders look for a jump in soybean oil exports and declining ending stocks. Traders also look for a slight dip in ending stocks for soybeans for the 2007/2008 season.
Weather is still expected to be hot tomorrow in Argentina, but heavier rains may shift southward from central Brazil in coming days, and this should bring more moisture to Argentina. Heavy rains in central growing areas of Brazil may taper off after today and move south into Rio Grande do Sul where they will be more beneficial. Barge traffic picked up on the rivers yesterday, as fog lifted in the upper Midwest. Movement remains light. Water levels on the upper Illinois and Ohio Rivers are higher, but not a major concern at present.
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The only thing we learn from financial history is that we learn nothing from it!
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James Bull
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Posting #5: Fri Feb 8th, 2008 08:47 |
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Pre-Opening Soy Complex Market Report for 2/7/2008
March soybeans traded 6 cents lower overnight. Malaysian markets are closed for the lunar holiday. Outside markets are mixed.
Market news is light today with Asian markets closed and traders awaiting the Export Sales Report this morning and the USDA's Supply/Demand Report tomorrow morning. Traders are looking for a jump in soybean oil exports and declining ending stocks. Traders are also looking for a slight dip in ending stocks for soybeans for the 2007/08 season. Commercial broiler growers in the US placed 176 million chicks for meat production for the week ending February 2nd, which was up 3% from last year. Since the start of the year, placements are up 4% from last year, and this suggests solid domestic meal demand into the spring. Weather is mostly a non-factor as river traffic is returning to normal after recent bouts with ice and fog on the upper rivers. However, there are transportation delays in the western and central Midwest due to blowing snow. After seeing the sharp gains and limit-up move early in the session yesterday, a lack of new news to help rationalize the surge to new highs and concerns from the bulls that a weaker economy might slow demand helped spark the aggressive long liquidation selling on the day. In addition, traders appear to be nervous that demand for soybeans and products will shift to South America where crop conditions appear favorable into harvest as long as the heavy rains subside.
Argentina now expected to be hot today and slightly cooler tomorrow. There is still a good chance for significant thundershower activity tomorrow and into the weekend. Brazil looks mostly the same, although heavy rains in Mato Grosso and Goias are lasting a bit long than expected yesterday. They are expected to taper off in the next couple of days and move south into Rio Grande do Sul where they are needed. Barge traffic is mostly back to normal on all sections of the river system. Movement remains light to moderate.
Weekly export sales for soybeans, released before the open, came in at 1,037,000 metric tonnes for the current marketing year and 31,000 metric tonnes for the next marketing year for a total of 1,068,000. Meal sales came in at 368,500 metric tonnes for the current year and 2,300 for the next year for a total of 368,100. Oil sales came in at 40,900 metric tonnes.
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The only thing we learn from financial history is that we learn nothing from it!
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James Bull
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Posting #6: Fri Feb 8th, 2008 18:13 |
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Pre-Opening Soy Complex Market Report for 2/8/2008
March soybeans traded 29 cents higher overnight. Malaysian markets are still closed for the lunar holiday and Indonesia is described as quiet. Outside markets are generally higher with the dollar lower.
The results of the US and world supply/demand reports for release before the opening should set the tone today. Asian markets are still mostly closed this morning due to the Lunar New Year. Traders do not consider outside markets to be a factor this morning, indicating instead that overnight strength was based mainly on short covering ahead of the reports. India said that its protein meal exports were up 28.9% in January over the same period last year. Otherwise, market news is light ahead of today's USDA reports. Cash markets are also quiet ahead of the reports, with rising water levels on the upper Illinois River not considered a major problem. Weather in Brazil and Argentina is forecast to become more favorable to crop development into the weekend. March soybeans have rallied 65 1/2 cents off of yesterday's lows into the report today, and funds were noted buyers of nearly 3,000-4,000 contracts each for soybeans and meal yesterday. In general, traders seem to be looking for a 5-10 million bushel decline in soybean ending stocks for this morning's report due to the strong export pace for soybeans and oil. Oil export sales were especially impressive yesterday with cumulative sales reaching 85.8% of the USDA forecast for the season as compared with 45.4% as normal for this time of the year.
Another blast of snow and cold weather into this weekend may create some transportation snags in the upper Midwest, but this is not expected to be a major problem. Widespread rain that has been forecast for Argentina in recent days is now expected to be less heavy. Still, temperatures should moderate starting today, and the moderate increase in rainfall will benefit crops. Hot weather in southern Brazil is expected to subside after today with increased rainfall there benefiting the soybean crop. Cash markets are nervously steady. Movement remains light to moderate.
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The only thing we learn from financial history is that we learn nothing from it!
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James Bull
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Posting #7: Tue Feb 12th, 2008 01:35 |
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Pre-Opening Soy Complex Market Report for 2/11/2008
March soybeans traded 10 1/4 cents lower overnight. Malaysian palm oil was up 27 points overnight. Outside markets are mixed with gold higher and energy markets lower.
The USDA report was considered bullish, but the market could not hold onto sharp gains from Friday early, and the market is likely to start this morning about 45 cents off of Friday's peak. Improved weather to advance the harvest in South America and ideas that fund buying might slow helped to pressure. The USDA pegged US soybean ending stocks at 160 million bushels as compared to 175 million bushels in last month's report. This was a bit below trade expectations and confirmed suspicions that both crush and export demand was better than expected. This is the second lowest ending stocks forecast in 11 years and the second lowest stocks/usage ratio since the 1972/73 season. More importantly, the USDA pegged total usage at 3.005 billion bushels, up 420 million from production and this sets the tone for a big push to secure planted area for the coming season. Soybean exports were raised 10 million bushels and crush was raised 5 million. Brazil and Argentina soybean crops were left unchanged at 60.5 and 47.0 million tons respectively. World ending stocks for the 2007/08 season were revised down to 45.82 million tonnes, down 42,000 from last month and down 15.85 million tonnes from last year. US meal exports were raised by 300,000 tons and oil exports were raised by 300 million pounds. However, biodiesel usage was lowered by 400 million pounds. Since the crush was also raised, this resulted in a 250 million pound jump in projected ending stocks of oil. The Commitment of Traders report with options shows the market in a slight overbought condition, but the buying trend from fund traders is seen as a positive short term force. Trend following fund traders increased their net long position by 9,324 contracts to 117,775, while index funds added 7,409 contracts to their net long to reach 190,990 contracts. The buying trend from funds is supportive. Funds were light sellers in oil and buyers in meal for the week.
Argentina weather looks normal, and southern Brazil areas look to get more rain early this week. Some scattered rains in the north could keep harvest progress slow. Cash basis at the Gulf was steady on Friday. Cash traders await a shift in China demand away from the US and towards Brazil and Argentina.
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The only thing we learn from financial history is that we learn nothing from it!
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James Bull
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Posting #8: Tue Feb 12th, 2008 15:28 |
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Pre-Opening Soy Complex Market Report for 2/12/2008
March soybeans traded 4 cents higher overnight. Malaysian palm oil was down 37 points (-1.1%) overnight. Outside markets are weaker in the energy and metals area.
Further delays for harvest in Brazil and continued signs of strong global demand helped provide underlying support to the soybean complex late in the session yesterday and overnight. Funds were noted sellers of near 3,000 contracts of soybeans and 3,000 of meal yesterday, while oil was supported by higher energy prices and short covering. The Agriculture ministry in Brazil pegged this season's crop at 58.5 million tonnes, which is up slightly from 58.2 projected last month and up from 58.4 million tonnes last year. The USDA estimate from Friday is still at 60.5 million tonnes. The lower close in Malaysia overnight is somewhat of a surprise given talk from the Malaysian commodities minister that palm blended bio-diesel could be introduced this year. Palm oil production from Malaysia is expected to fall by 1.3% in 2008 to near 15.6 million tonnes. The market sees increased bio-diesel production from Malaysia, Argentina and Brazil this season as reasons to see less vegetable oil exportable surplus on the world market, and this is seen as a potential longer-term bullish force for the soybean oil market. While US soybean oil exports are expected to be near 800,000 tonnes this season, Malaysia exports more than 13 million tonnes onto the world market, and Argentina exports near 6.4 million tonnes of soybean oil on the world market. The lack of a limit-up move in wheat added to the weakness, as there were "fewer" concerns for overflow buying support into the soybean complex. Weekly export inspections came in at 37.8 million bushels which was higher than expected and helped support a bounce off of the mid-session lows. Export shipments need to average 12.4 million bushels per week to reach the current USDA export forecast for the 2007/08 season.
Rains and cooler weather is seen as beneficial for Argentina and southern Brazil areas this week, but scattered rains in the north are likely to delay harvest further and also raise quality concerns. Cash basis bids were lower, as margin call selling from elevators and ideas that elevators do not want to encourage more producer selling right now helped to pressure. Cash basis at the Gulf was firm yesterday with loadings in progress.
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The only thing we learn from financial history is that we learn nothing from it!
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James Bull
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Posting #9: Wed Feb 13th, 2008 15:33 |
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Pre-Opening Soy Complex Market Report for 2/13/2008
March soybeans traded 3 cents lower overnight. Malaysian palm oil was down 15 points overnight. Outside markets are a slight negative this morning.
News is a little bit slow for the soybean complex, as the recent focus of attention has been on the ups and downs in the wheat market. Overflow selling from wheat markets was seen as the primary negative force yesterday. Volume was heavy as index funds are rolling out of March contracts. Continued harvest delays in Brazil have helped provide some support. Funds were noted sellers of near 2,000 contracts of soybeans and 2,000 of meal and buyers of near 1,500 contracts of oil. More rain in the key Mato Grosso state in Brazil has slowed harvest again and helped support the bull spreads yesterday. In addition, ideas that the spring wheat rally could attract more spring wheat acres and fewer soybean acres in the northern and western Corn Belt in the US added to the positive tone. The rally may also encourage more Canadian wheat and less canola. Harvest delays in Brazil could keep US soybeans and products competitive on the world market for a bit longer than normal. Oil led the rally yesterday, as a recovery in energy prices off of the lows and expectations for continued strong demand helped support. As a starting point, the USDA sees planted area increasing 7.4 million acres to 71 million for the 2008/09 season as producers shift to more wheat and less corn for the coming season. Production was pegged at 2.95 billion bushels (yield 42.1) and usage was pegged at 2.947 billion. If ending stocks for 2007/08 remain at 160 million bushels, total supply would be near 3.116 billion, which would leave ending stocks at just 169 million bushels. The USDA outlook conference numbers may be released next week and should provide more updated supply and demand projections. There is still no new news on rumors that the India government was considering lifting or reducing tariffs on edible oil imports. Meal was under pressure from weakness in other feedgrains yesterday. Recent weekly reports suggests the poultry industry is expanding and monthly US production of poultry totaled 3.39 billion pounds, up 6% from last year.
Scattered rains in the central and northern growing areas of Brazil may be enough to keep harvest activity slow. Southern Brazil looks drier over the near term. Cash basis bids at river locations were firm yesterday.
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The only thing we learn from financial history is that we learn nothing from it!
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James Bull
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Posting #10: Thu Feb 14th, 2008 16:57 |
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Pre-Opening Soy Complex Market Report for 2/14/2008
March soybeans traded 15 cents higher overnight. Malaysian palm oil was up 99 points (2.9%) overnight to a new all-time high. Outside markets are a slightly positive this morning.
Fears that China will emerge as a more aggressive buyer of vegetable oil and soybeans on the world market following drawdowns in stocks during the New Year holidays helped spark the strong gains overnight. Traders also view Minneapolis wheat as an example of what could happen in the other grain markets if there is extreme tightness in world and US stocks at the same time. In 2007, China imported near 8 million tonnes of palm oil, rapeseed oil and soybean oil, and with rumors that near 40% of the winter rapeseed crop in China was damaged by the storms, traders see active imports in the weeks and months just ahead. A turn up in crude oil on the world market, fears that Indonesia will tax palm oil exports and concerns that India may eventually reduce import tariffs on edible oil imports added to the positive tone. Strong basis levels for oil from Brazil and Argentina this week and talk that China will become more active helped support futures yesterday. However, weakness in meal and other feedgrains and long liquidation selling from speculators helped to pressure the market early. Funds were noted sellers of near 1,500 contracts of meal yesterday but buyers of near 2,500 soybean contracts and 3,000 oil contracts. The monthly crush report and the weekly export sales report, released before the opening, could help provide some leadership today. While part of the rapeseed winter crop was damaged in China, traders believed that planted area was up sharply from last year, which is seen as a partial offset to the damage news. The move from 5 cents lower on the session to 90 cents higher on the day yesterday for March Minneapolis wheat helped spark the turn up from the early lows for soybeans and the products. The limit-up close in Minneapolis March wheat helped support the soybean complex late in the day. The USDA announced a sale of 110,000 tonnes of US soybeans to Mexico yesterday, which added to the positive tone. Early pressure stemmed from talk of drier weather in parts of northern Brazil and weakness in wheat.
A few days of warmer and drier weather for southern Brazil and parts of Argentina are a mixed bag, as some stress is possible for areas which have been dry recently but much of the region could benefit from the weather. Soybeans for shipment in the first half of February traded as high as 57 cents premium March yesterday as compared with 44 cents over the previous day, as export demand is holding in the US a bit longer than normal, possibly due to harvest delays in South America.
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The only thing we learn from financial history is that we learn nothing from it!
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