January 10, 2008

 

CBOT Soy Review on Wednesday: Consolidates prior gains on speculative fund sales

 

 

Chicago Board of Trade soybean futures ended a choppy, two-sided session lower Wednesday, succumbing to trade consolidation after recent highs and late speculative fund selling.

 

January soybeans settled 7 1/2 cents lower at US$12.49 and March soybeans ended 4 1/2 cents lower at US$12.62 1/2. March soymeal settled US$4.10 lower at US$348.10 per short tonne. March soyoil finished 8 points higher at 51.08 cents per pound.

 

The soybean market is a mature market trading at all-time highs, and concerns surrounding China's attempts to calm domestic prices, improved Argentine weather outlooks and uncertainty ahead of Friday's crop reports, provided some issues for traders to take a cautious approach after setting recent highs, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Better-than-expected rains in Argentina, and forecasts for a front to bring cooler temperatures and wetter conditions to parched areas of Argentina's crop belt laid the ground work for a setback in prices, analysts said.

 

News that China will regulate grain and edible oil prices to protect consumers, the risk of a potential surprise in Friday's crop reports as well as outlooks for index funds to trim some length in the market as they reallocate some positions to corn futures attracted selling to weigh on prices, analysts said.

 

However, bullish long range fundamental outlooks, with a tightening balance sheet and the need to buy acres in the spring remain supportive features to offset weakness and produce a choppy market theme for most of the day, analysts added.

 

The DTN Meteorlogix weather forecast said Wednesday's forecast models for Argentina's primary crop areas, indicate more rain for corn and soybeans than Tuesday's outlook. It now appears that central Argentina crop areas will receive from three-10ths of an inch to 1 1/2 inches of rain, with locally heavier amounts, Wednesday into Thursday, Meteorlogix said. More rain and cooler temperatures are needed to support pollinating corn and developing soybeans stressed by recent hot, dry weather, Meteorlogix reported.

 

Meanwhile, in Brazil's primary soybean areas, a favorable weather pattern for developing soybeans will continue during the next week to 10 days, Meteorlogix added.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EST. Trade estimates put soybean export sales at 250,000 to 450,000 metric tonnes. Soymeal sales are projected in a range of 25,000 to 90,000 metric tonnes, with soy oil sales expected in a range from zero to 10,000 tonnes.

 

USDA is scheduled to release its January supply and demand projections Friday at 8:30 a.m. EST. The average of analysts' estimates peg 2007-08 U.S. soybean ending stocks at 170 million bushels, down 15 million from December's forecast. The average of analysts' estimates point toward 2007 soybean production at 2.584 billion bushels, down from 2,594 in November. The average of analysts' estimates project Dec. 1 U.S. soybean stocks at 2.268 billion bushels from estimates that ranged from 2.240 to 2.316 billion bushels.

 

In pit trades, buyers and sellers were scattered among various commission houses, with Newedge USA LLC a seller of 1,000 March. Speculative fund selling was estimated at 2,500 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, as the markets consolidated after recent gains. Soymeal futures fell prey to speculative fund selling, with a lack of fresh supportive news, a lack of follow-through buying and spillover weakness from soybeans combining to weigh on prices, analysts said.

 

Soyoil futures ended mixed, finishing well off earlier highs as late speculative selling coupled with spillover weakness from a setback in crude oil futures applied pressure to ebb earlier price strength, analysts added.

 

March oil share ended at 42.30% and the March crush ended at 65 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.

 

In soyoil trades, Citi bought 800 March, Newedge bought 300 May, and Tenco bought 400 July. JP Morgan sold 400 March, Newedge USA LLC sold 1,000 March and Iowa Grain sold 1,400 March.