January 10, 2006

 

CBOT Soy Review on Monday: Tumbles on tech sales, argentine weather

 

 

Soybean futures on the Chicago Board of Trade ended sharply lower Monday, backpedaling to one-month lows on the heels of technical weakness and improved weather outlooks for crops in Argentina.

 

March soybeans finished 17 cents lower at US$5.94, March soymeal settled US$4.10 lower at US$184.60 a short tonne, while March soyoil ended 40 points lower at 22.59 cent a pound.

 

Follow-through selling from Friday's weak technical close set the tonnee of the market from the outset, with fundamentally bearish features in the absence of a weather threat in South America leaving futures over priced, analysts said.

 

Speculative fund selling was a featured attraction, with recent buyers running for covering as prices were firmly planted below the psychological US$6.00 per bushel levels basis nearby contracts. This was consistent, with futures maintaining double digit losses throughout.

 

The ability of the most active March future to settle below meaningful support at its 50-day moving average as well as penetrate into a chart gap left from Dec. 12 painted a bearish picture for bullish traders.

 

The squaring of positions heading in Thursday's U.S. Department of Agriculture crop reports added to the defensive tonnee in the market also, said a CBOT commission house broker.

 

Market technicians said serious near-term technical damage has been inflicted with Monday's sharp down move. Friday's low-range and weekly low close was a technical tip-off that the bears would come out in strong fashion.

 

Meanwhile, the DTN Meteorlogix forecast said scattered showers and thunderstorms on Tuesday and Wednesday are expected in Argentina, with rainfall of 0.10-0.50 inch with locally heavier amounts expected. During Thursday through Sunday, rains look to be even heavier, with 0.50-2.00 inch rains in store, with locally heavier amounts possible, Meteorlogix added.

 

In southern Brazil soybean areas, hot and dry weather will continue in Rio Grande do Sul and Parana during this week. Dry conditions or just a few light showers are in store during the next seven days. Temperatures will be above to much-above normal with highs in the 90s to low 100s Fahrenheit, Meteorlogix said.

 

USDA said soybeans inspected for export in the week ended Jan. 5 totaled 20.216 million bushels. Analysts expected soybean inspections in a range of 17 million to 24 million bushels.

 

In pit trades, RJ O'Brien and UBS Securities each bought 1,000 March. ABN Amro, Calyon Financial, Fimat, RJ O'Brien, and Refco Div of Man Financial were featured sellers. Commodity fund selling was pegged at 5,000 contracts.

 

South American soybean futures finished lower across the board. The March futures ended 16 1/2 cents lower at US$6.20.

 

 

SOY PRODUCTS

 

Soymeal futures stumbled lower, falling to 1-month lows in unison with soybeans. Technically inspired selling was a featured attraction, with the most active March futures managing to penetrate key support levels as well as settle inside a 1-month old chart gap.

 

Soyoil futures followed the lead of the rest of the soycomplex, sinking to a one week low before the active March future found support just above its 50-day moving average - 22.34. March oil share ended at 37.96%, and the March crush was at 60 1/2 cents.

 

In soymeal trades, Commodity fund selling was estimated at 3,000 lots, with J.P. Morgan, Fimat, Goldenberg Hehmeyer, Man Financial and Refco Div of Man Financial featured sellers.

 

In soyoil trades, ADM Investor Services, Cargill, Citigroup, Fimat, Man Financial, O'Connor and RJ O'Brien were key buyers on the day. Citigroup, Iowa Grain, Man Financial, RJ O'Brien, Rand Financial and Rosenthal were featured sellers. Commodity fund selling was estimated at 1,000 lots.