January 10, 2007

 

CBOT Soy Review on Tuesday: Down; technicals, index length attract sales

 

 

Chicago Board of Trade soybean futures stumbled lower Tuesday, backpedaling to double digit losses as technical pressures, and fund length attracted speculative sales.

 

January soybeans finished 11 1/2 cents lower at US$6.53 1/2, and March soybeans ended 12 3/4 cents lower at US$6.64 1/2. March soymeal settled US$4.40 lower at US$190.70 per short tonne, while March soyoil ended 32 points lower at 28.17 cents a pound.

 

The lack of fresh fundamental news kept the market focused on technical weakness, with a sharp early drop in crude oil and worries over larger than expected index fund length enticing weaker handed longs to liquidate some positions, said Brian Hoops, president Midwest Market Solutions in Yanktonne, South Dakota.

 

Speculative led selling served as the catalyst to keep prices firmly planted in negative territory, with favorable South American crop conditions and positioning ahead of Friday's crop reports aiding the defensive theme, traders added.

 

The index fund length raised fears that if they pitch in the towel on longs, the market would be ripe for a sharp sell-off, Hoops added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said Argentina's prospects for drier and stressful crop weather are reduced in the latest outlook. Scattered thundershowers will dot the central Argentine crop belt through the end of the week, with drier weather moving into the region over the weekend. However, temperatures do not appear to be as hot as previously indicated. Temperatures will be normal to above normal through the end of the week, then cooler during the coming weekend, Meteorlogix forecasts.

 

In Brazil, crop weather continues to feature showers and warm temperatures, a very favorable combination for soybeans, Meteorlogix reports.

 

In pit trades, Rand Financial bought 500 March, with ADM Investor Services, JP Morgan and RJ O'Brien each buying 300 March. UBS Securities sold 1,000 March, Man Financial sold 500 March, Bunge Chicago sold 400 March. ADM Investor Services, JP Morgan and RJ O'Brien each sold 300 March. Speculative fund selling was estimated at 4,000 contracts.

 

Day session volume on the e-CBOT platform totaled 35,641 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board. Soyoil futures carved out 2-month lows before managing to find stability, traders said. The market was pressured by speculative led sales, with technical weakness, uncertainty tied to index funds positions amid the discovery of larger than expected length in the market and declines in crude oil futures attracting sellers, analysts said. The sharp early losses in crude oil dragged soyoil down to its lows, but crude oil's bounce off its provide support to trim the declines, said Hoops said.

 

Soymeal futures stumbled to two-week lows, succumbing to spillover pressure from the rest of the soycomplex, traders said. The ability of soyoil to bounce off its lows attracted soyoil/soymeal spreading to help keep prices firmly planted in negative territory.

 

March oil share ended at 42.48% and the March crush ended at 65 cents.

 

In soymeal trades, Bunge Chicago bought 300 March, Tenco bought 500 July and Fortis bought 1,500 March. Tenco sold 1,000 March, Man Financial sold 500 March, and Fimat sold 400 March.

 

In soyoil trades, UBS Securities and JP Morgan each bought 600 March, Citigroup and Rand Financial each bought 500 March, with Bunge Chicago buying 400 March and ADM Investor Services buying 300 March. RJ O'Brien sold 1,000 March, JP Morgan sold 800 March, Man Financial and Rand Financial each sold 400 March, with ADM Investor Services and Fimat each selling 300 March. Speculative funds were estimated sellers of 3,000 contracts.