January 17, 2007

 

CBOT Soy Review on Tuesday: Prices lower on profit taking

 

 

Chicago Board of Trade soybean futures ended lower Tuesday on profit taking from Friday's rally to 1 1/2 year highs.

 

March soybeans ended 8 cents lower at US$7.08 1/2. March soymeal settled US$1.50 lower at US$208.10 per short tonne, while March soyoil ended 36 points lower at 28.79 cents a pound.

 

The absence of fresh supportive news following Friday's sharp gains opened the door for the minor setback, traders said.

 

Corn has been the driver of grain and oilseed markets, and once that market failed to sustain limit up levels, traders saw an opportunity to take some profits.

 

Tuesday, corn coughed and soybeans and wheat caught a cold, according to Vic Lespinasse, floor analyst with A.G. Edwards and Sons in Chicago, referring to soybean's slippage on corn's pull back.

 

Favorable South American crop conditions and ample nearby supplies remained defensive features, particularly with nearby futures trading at their highest levels since July 2005 on continuation charts, a CBOT floor analyst added.

 

Nevertheless, traders are not reading too much into Tuesday's declines, as the setback was only a fraction of the 40-plus cent gains achieved Friday, analysts said. Solid commission house buying was reported on price breaks, providing an indication of good underlying support, a trader added.

 

Meanwhile, the National Oilseed Processors Association reported its members crushed 149.162 million bushels of soybeans during December. The figure was just above the average trade estimate of 148.7 million bushels, and the 148.2 million NOPA reported for the month of November. Soyoil stocks decreased to 2.605 billion pounds, down from the November stocks figure of 2.694 billion. The average of trade estimates projected stocks at 2.735 billion pounds.

 

US soybeans inspected for export in the week ended Jan. 11 totaled 28.429 million bushels. Pre-released analysts estimates anticipated inspections in the range of 16 million to 31 million bushels.

 

In pit trades, ADM Investor Services bought 800 March contracts, Citigroup bought 1,000 March, RJ O'Brien, Man Financial and UBS Securities each bought 500 March. JP Morgan sold 600 March, ADM Investor Services and Term Commodities each sold 500 March, UBS Securities, RJ O'Brien, Rand Financial and Iowa Grain each sold 300 March.

 

 

SOY PRODUCTS

 

Soy product futures ended lower in unison with soybeans. Soyoil was the downside leader of the products, pressured by speculative profit taking following Friday's sharp gains, traders say. The absence of a crutch for the market to lean on, coupled with sharp declines in crude oil futures uncovered sellers to stage a modest setback from Friday's gains, a CBOT floor analyst said. Meanwhile, lower than expected soyoil stocks reported in NOPA's crush report did provide light underlying support.

 

Soymeal futures stumbled lower in step with the rest of the complex. The market consolidated Friday's sharp gains, but managed to gain some product share on the unwinding of soyoil/soymeal spreads, traders said.

 

March oil share ended at 40.89% and the March crush ended at 66 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with Rosenthal a featured buyer of 1,000 May and 2,000 July.

 

In soyoil trades, Bunge Chicago bought 600 July, JP Morgan bought 800 March and Tenco bought 1,100 March contracts. Fimat sold 900 March, Man Financial sold 500 March, RJ O'Brien sold 300 March and Rand Financial sold 400 March contracts. Commercial houses were net buyers on the day and speculative funds were net sellers.