January 17, 2008

 

CBOT Soy Review on Wednesday: Stumbles lower on speculative profit-taking

 

 

Chicago Board of Trade soybean futures settled sharply lower Wednesday, stumbling on speculative profit-taking from previous highs.

 

March soybeans ended 24 1/2 cents lower at US$12.77, July soybeans finished 23 1/4 cents lower at US$12.96 1/2 and November soybeans ended 11 cents lower at US$12.74. March soymeal settled US$9.20 lower at US$346.90 per short tonne. March soyoil finished 58 points lower at 52.73 cents per pound.

 

The market set the highest prices in history this week, so with a little upside exhaustion from Friday's crop report, traders took some profits to the bank, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Broad-based commodity selling added to the defensive tonnee, with news of China exerting measures to curb food inflation seen weighing on prices also, analysts said.

 

The news of China imposing price controls on essential commodities hit the market psychologically and with metals and crude oil down, futures received inflationary bearish signals as well, Hannagan added.

 

Beneficial overnight rains in central Argentina and forecasts for additional showers to move into the region through the weekend took some wind out of bullish sails also, traders said.

 

The influence of large speculative index fund selling accelerated the losses, with traders saying the large funds have overdone market moves.

 

Meanwhile, less profit-taking was seen in new-crop futures, as uncertainty over potential 2008 acreage and the risk of a weather threat this year bring fresh speculative investment in new-crop futures, Hannagan said.

 

The DTN Meteorlogix weather forecast calls for at least some thunderstorm development over the major corn and soybean areas through the end of this week in Argentina. Some relief from dry weather stress will be noted. In far southern Brazil, Rio Grande do Sul province, the third-largest soybean producer in Brazil, continues with an improved chance for scattered thunderstorms during the next five days. Total rainfall of two inches is headed for the province, Meteorlogix reports.

 

In pit trades, Tenco bought 600 March and Iowa Grain bought 300 March. MF Global sold 600 march and Rosenthal sold 300 March. Speculative fund selling was estimated at 5,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, backpedaling in unison with soybeans.

 

Soyoil futures stumbled lower, succumbing to profit- taking pressure, with spillover from sliding crude oil futures and worries of potential slowdowns in Chinese imports of edible oils attracting speculative sales, analysts said. However, good underlying commercial buying limited downside potential, traders noted.

 

Soymeal futures retreated as well, retracing the gains achieved in recent sessions on profit-taking pressure. The market continued to consolidate from contract highs, as a lack of fresh news and the exhaustion of aggressive speculative buying opened the door for futures to stumble below technical support levels, analysts added.

 

March oil share ended at 43.18% and the March crush ended at 66 1/4 cents.

 

In soymeal trades, JP Morgan bought 400 December, Citi bought 300 March, Fortis bought 400 May, and RJ O'Brien bought 400 July. JP Morgan sold 500 December. Speculative fund selling was estimated at 3,000 lots.

 

In soyoil trades, Bunge Chicago, Fortis and JP Morgan each bought 300 March. Citi bought 300 March, 300 May and 300 July, Prudential Bache bought 700 May. Bunge Chicago sold 300 December, JP Morgan sold 300 March. Speculative fund selling was estimated at 3,000 lots.