January 11, 2007

 

CBOT Soy Review on Wednesday: Edges up; finds stability after early slide

 

 

Chicago Board of Trade soybean futures ended narrowly mixed Wednesday, with nearby contracts marginally higher on a technical and speculative-led recovery from earlier price weakness.

 

January soybeans finished 1/4-cent higher at US$6.53 3/4, and March soybeans ended 1/4-cent higher at US$6.64 3/4. March soymeal settled US$1.00 higher at US$191.70 per short tonne, while March soyoil ended 13 points lower at 28.04 cents a pound.

 

Futures managed to find stability and rebound from initial setbacks, with the exhaustion of early liquidation pressure, and the ability of futures to hold support at the low end of a broad range dating back to early November, provided strength for prices to bounce higher, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

Spillover support from corn futures' recovery prompted light short- covering interest to boost prices as well, Kleist added.

 

A large crop being grown in South America, fears export demand could shift to Brazil if U.S. prices are too high and light follow-through liquidation pressure combined to keep a lid on upside movement, analysts added. Early selling pressure dragged futures to two-month lows, before exhausted selling and underlying commercial buying surfaced to contain the losses, traders said.

 

In addition, a quiet news front, with non-threatening South American weather conditions and outlooks for higher production and carryout forecasts in Friday's crop reports helped limit gains and promoted a sideways consolidation theme, traders added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said South America continues on the favorable-weather track for its summer crops. Southern Argentina crop areas had rain overnight of up to three-quarters of an inch with rain currently moving into central crop areas.

 

In southern Brazil, thunderstorms are headed into the region Wednesday through Thursday, with up to one and one-half inch of rain. The pattern of warm temperatures and periodic rains is beneficial to soybean crops in the southern hemisphere, Meteorlogix reports.

 

On tap for Thursday, the U.S. Census Bureau will release its stocks and consumption report at 7:00 a.m. CST. The U.S. Department of Agriculture is scheduled to release its weekly export sales report 7:30 a.m. CST. Analysts surveyed by Dow Jones Newswires predicted U.S. weekly soybean export sales between 350,000 and 550,000 metric tonnes for the week ended Jan. 4.

 

Friday, USDA will release its updated production, quarterly grain stocks and supply and demand tables. The average of analysts' estimates anticipates U.S. soybean production for the 2006-07 marketing year at 3.235 billion bushels versus 3.204 billion in the USDA's November report. The average of analysts' estimates pegs the Dec. 1 stock figure at 2.736 billion bushels, and the average of analysts' estimates peg soybean-ending stocks at 586 million bushels, up 21 million from December's forecast.

 

In pit trades, ADM Investor Services bought 700 March, FCStonnee and JP Morgan each bought 400 March and 300 May, RJ O'Brien bought 500 March and 400 May, Calyon Financial and Tenco each bought 300 March.

 

On the sell side, Iowa Grain and Man Financial each sold 1,000 March, ADM Investor Services, RJ O'Brien and UBS Securities each sold 500 March, and Prudential Financial sold 400 March. Speculative funds were estimated net sellers of 3,000 contracts.

 

Day session volume on the e-CBOT platform totaled 37,650 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil continuing its retreat to lower levels. Soyoil futures carved out new two-month lows, succumbing to speculative liquidation pressure, with poor technicals and spillover weakness from crude oil setting the stage for the losses, analysts said.

 

Soymeal futures ended a two-sided session higher, recovering from earlier losses with soybeans. The market gained product share, benefiting from the unwinding of soyoil/soymeal spreads, traders said.

 

March oil share ended at 42.24% and the March crush ended at 65 1/2 cents.

 

In soymeal trades, buyers and sellers were lightly scattered among various commission houses.

 

In soyoil trades, buyers were scattered among various commission houses. Fortis sold 700 March, Fimat sold 600 March, UBS Securities sold 500 July and 300 March, Man Financial, JP Morgan and Rand Financial each sold 300 March. Speculative fund selling was estimated at 3,000 lots.