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Relatively firm cash markets are expected to limit deliveries against Chicago Board of Trade January soyabean futures on Thursday, which is the first notice day for deliveries against the contract, traders said on Wednesday. But a softening cash market for soyameal could trigger up to 300 deliveries against futures. Delivery estimates for soyabeans ranged from zero to 75 contracts, with most sources expecting no deliveries. For soyameal, estimates ranged from zero to 300 contracts.
Soyaoil deliveries were estimated at 200 to 1,500 contracts and rough rice deliveries at 100 to 1,000 contracts. Traders who expected soyameal deliveries cited a widening spread, or price difference, between the January and March soyameal futures contracts. The January contract was trading at $266.60 per short ton, a discount of $1.90 to the March contract, at $268.50. That price spread widened from $1.50 on Tuesday, reflecting weak immediate demand for soyameal.
"I can't imagine, the way the spread is acting, that there won't be some (soyameal deliveries)," said Jack Scoville of the Price Futures Group in Chicago. Scoville noted weak domestic cash values for soyameal, a high-protein ingredient used in hog and poultry feed, and the availability of competing feed ingredients such as dried distillers' grains (DDGs).
During a futures contract's delivery period, which lasts two to three weeks, the futures market acts like a cash market. Firms holding short positions in CBOT December futures can issue intentions to deliver the physical commodity. Traders holding the oldest-date longs must accept delivery. Traders monitor deliveries closely because heavy deliveries tend to pressure the price of the nearby futures contract, while low deliveries tend to support futures prices.
One indication of delivery prospects is the amount of grain registered with the CBOT. As of Tuesday night, the exchange reported 3,023 contracts of soyaoil registered for delivery, 2,132 contracts of rough rice, and no contracts of soyabeans or soyameal. Commercial firms have until 4 pm CST (2200 GMT) to register additional contracts for delivery. Registration of a commodity makes it eligible for delivery but does not necessarily mean it will be delivered.

Copyright Reuters, 2016

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