Midwest river woes may spur deliveries against CBOT November soy futures

By Julie Ingwersen

CHICAGO, Oct 28 (Reuters) - Deliveries against Chicago Board of Trade November soybean futures could be moderately heavy on Monday, first notice day, traders and analysts said on Friday, due to low water on Midwest rivers that has slowed movement of grain to U.S. Gulf export terminals.

The resulting backlogs of grain and soy at Midwest river elevators could encourage commercial grain handlers to deliver against futures, letting someone else own the grain and incur storage charges until the next futures delivery cycle, against the January 2023 futures contract.

"Most of our (CBOT soybean) delivery points are along the Illinois River, which feeds into the Mississippi. There are all sorts of ideas that soybeans are going to be backed up, so there should be big deliveries," said Jack Scoville, market analyst at The Price Futures Group.

Expectations for deliveries against CBOT November soybean futures were mostly for zero to 500 contracts, although one analyst said soy deliveries could reach 1,000 contracts.

The exchange reported zero deliveries on first notice day for the last four CBOT soybean delivery cycles, including the September, August, July and May 2022 futures contracts. But a year ago, first-day deliveries against the November 2021 soybean contract totaled 1,318 lots.

Firm domestic cash markets for soybeans, driven by robust profit margins for soy crushers, may prevent even more deliveries, trader said, encouraging grain handlers to retain ownership.

The CBOT reported that just five soybean futures contracts were registered for delivery as of Thursday night. However, commercial companies have until 4 p.m. CDT (2100 GMT) to register additional CBOT contracts for delivery.

Traders closely monitor deliveries. A large number of deliveries tends to pressure the price of a nearby futures contract, while a small number would tend to support prices.

During a contract's delivery period, which lasts two to three weeks, the futures market acts like a cash market. Companies holding short positions in November futures can issue intentions to deliver the physical commodity. Traders holding the oldest-dated longs must accept delivery. (Reporting by Julie Ingwersen; Editing by David Gregorio)

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