January 15, 2008

 

CBOT Soy Review on Monday: Mixed; stumbles from highs on profit-taking

 

 

Chicago Board of Trade soybean futures ended mixed Monday, and well off early highs, backpedaling on profit-taking pressure and spillover weakness from a retreat in nearby soymeal prices, analysts said.

 

March soybeans ended 2 1/4 cents lower at US$12.96 1/2, July soybeans finished 1 1/4 cent higher at US$13.20 and November soybeans ended 18 cents higher at US$12.63. March soymeal settled US$6.10 lower at US$352.50 per short tonne. March soyoil finished 51 points higher at 53.17 cents per pound.

 

The slide in soymeal led to the retreat in soybeans, with South American hedge pressure, index fund relocation, and the exhaustion of aggressive buying attracting profit-taking after the market established new all-time highs in early action, said Brian Hoops, president Midwest Market Solutions in Yanktonne South Dakota.

 

New crop futures managed to hold onto solid gains, but slipped well off the limit-up levels seen earlier in the day on profit-taking weakness as well, traders said.

 

New crop futures remain underpinned by acreage uncertainties for 2008, as the market is in the midst of a "dog fight" with new crop corn and Minneapolis wheat for spring acreage, said Joe Victor, analyst with Allendale Inc., in McHenry, Ill.

 

All the uncertainty lies in new crop acreage and that is supporting deferred month futures, with nearby contracts susceptible to profit-taking pressure as the market has a better handle on old crop fundamentals, he added.

 

Soybeans had the least amount of reasons to rally in comparison to corn and wheat, and with a lot of air under the market, it was easy to cut early gains once corn and nearby wheat came off its limit-up levels, a cash-connected CBOT broker said.

 

Nevertheless, the market maintains bullish underlying fundamentals, with tightening projected inventories, stout demand and lingering worries over crop conditions in Argentina expected to limit near-term downside potential, analysts added.

 

The DTN Meteorlogix weather forecast calls for a return to hot and dry weather in Argentina. This pattern will stress pollinating corn along with developing soybeans and sunflowers. There are some shower chances for late week, but this prospect is uncertain. In addition, little if any significant rainfall is expected during the next week in soybean and sunflower areas of southwest Buenos Aires and southern La Pampa along with periods of hot weather.

 

In pit trades, JP Morgan bought 500 November, Newedge USA LLC and RJ O'Brien each bought 300 March. RJ O'Brien sold 2,500 March.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with nearby soymeal futures stumbling lower on speculative profit-taking. Soymeal futures led the decline in the soycomplex, with the exhaustion of aggressive buying, oil/meal spreading and technically inspired selling attributed to the most-active March future penetrating support at Friday's lows attracting sellers, analysts said. The challenge of Friday's lows produced an outside lower day, presenting some technical weakness to the market, said Brian Hoops of Midwest market Solutions.

 

Soyoil futures ended well off its highs, but remained firmly planted in positive territory. The market set new all-time highs in early action, feeding off bullish spillover from soybeans, and crude oil futures with strength in global vegoils markets an underpinning feature also, analysts said. However, profit-taking pressure reared its head in soyoil as well, with speculative sales surfacing to trim gains down the stretch, analysts added.

 

March oil share ended at 42.99%, and the March crush ended at 63 3/4 cents.

 

In soymeal trades, Newedge USA LLC bought 400 March, FCStonnee sold 500 July, Penson GHCO sold 600 March, and RJ O'Brien sold 1,400 March.

 

In soyoil trades, ADM Investor Services bought 400 March, Bunge Chicago bought 600 March, and Citi bought 300 March. RJ O'Brien sold 900 March.