January 4, 2007

 

CBOT Soy Review on Wednesday: speculative sales produce double-digit losses

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, as speculative-led selling kept the market firmly planted in negative territory, analysts said.

 

January soybeans finished 14 1/4 cents lower at US$6.69 1/4, and March soybeans ended 15 1/4 cents lower at US$6.82. March soymeal settled US$4.50 lower at US$192.40 per short tonne, while March soyoil ended 62 points lower at 29.08 cents a pound.

 

The market succumbed to broad-based commodity wide weakness, with the veracity of the speculative selling catching some traders off guard, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The funds came to sell and participants took profits from 2006 amid the absence of fresh fundamental news to spark activity, a CBOT floor analyst said.

 

The flipping of the calendar seemingly flipped the attitude of the funds, as the market attempted to plunge down and take out moving average support, Scoville added. Investment capital was flowing more to stocks and selling commodities today, he said.

 

Meanwhile, bearish weather conditions for South American crops, outlooks for larger U.S. crop estimates in next week's government reports, coupled with spillover pressure from sharply lower corn and wheat futures served as defensive influences to keep sellers leading price direction, traders added.

 

The DTN Meteorlogix Weather Service forecast said South America's crop weather pattern remains favorable. Southern Brazil's Rio Grande do Sul and Parana provinces will have rains of up to 1 1/2 inches to finish out the week, very good for additional soil moisture for soybeans. In northern Brazil, Mato Grosso has daily showers and thunderstorms to keep its weather pattern favorable through the middle of next week.

 

Meanwhile, in the palm oil production areas of Southeast Asia - Malaysia and Indonesia - scattered thundershowers will continue during the next five days. This is an active weather pattern, and flooding is possible as a result of this ongoing rainfall trend. Palm oil production is not seriously threatened, but road damage due to flooding could be extensive, Meteorlogix reports.

 

In pit trades, Calyon Financial bought 1,000 March, Fimat bought 1,700 March, and Prudential Financial bought 500 March.

 

UBS Securities, Fimat and Iowa Grain each sold 500 March, Prudential Financial sold 400 March. ADM Investor Services sold 400 November, and Man Financial sold 300 March. Speculative fund selling was estimated at between 1,500 and 2,000 lots.

 

Day session volume on the e-CBOT platform totaled 36,981 lots.

 

 

SOY PRODUCTS

 

Soy product futures stumbled lower in unison with the defensive theme in soybeans. Soyoil futures fell to over one-week lows, grinding through underlying technical support levels. The market followed the lead of price weakness in soybeans, with a plunge in crude oil futures and overnight declines in palm oil attracting speculative sales, analysts said. The ability of nearby contracts to filter down to a chart gap left from last week provided additional pressure to weigh on prices, traders added.

 

Soymeal futures ended lower across the board, keeping pace with the defensive theme filtering through the complex and commodity markets in general, a CBOT floor analyst said.

 

January oil share ended at 43.27% and the March crush ended at 61 1/4 cents.

 

In soymeal trades, Fimat bought 600 March, Fortis bought 500 March and Calyon Financial and Iowa Grain each bought 300 March. Fimat and Fortis each sold 500 March, and Bunge Chicago sold 400 March. Speculative funds were net sellers on the day.

 

In soyoil trades, Fimat bought 500 March, Citigroup bought 400 March, and Iowa Grain and Prudential Financial each bought 300 March. ADM Investor Services sold 900 March, Calyon Financial and Man Financial each sold 500 March, JP Morgan and Fortis each sold 300 March. Speculative fund selling was estimated at 3,000 lots.