January 20, 2006

 

CBOT Soy Review on Thursday: Mixed; consolidates from downward spiral

 

 

Chicago Board of Trade soybean futures ended narrowly mixed Thursday, with prices hovering near unchanged levels, as the market consolidated from its recent downward spiral.

 

March soybeans finished 3/4 cent lower at US$5.65, March soymeal settled US$0.90 higher at US$178.40 a short tonne, and March soyoil ended 8 points lower at 21.08 cent a pound.

 

The market settled into a consolidative phase Thursday, taking a break from the aggressive sales that dropped futures to six-week lows Wednesday, analysts said.

 

Subdued, choppy trade was consistent for most of the day, with oversold technical factors and talk of China buying ahead of the Lunar New Year providing underlying support to temper downward momentum.

 

The most-active March future managed to filter into a chart gap left from Wednesday, but with overall bearish fundamental outlooks, upside potential was limited, said a CBOT commission house broker.

 

This was a consistent theme over the day, with bullish traders encouraged by the market's ability to hold above December lows in the face of bearish inputs. Nevertheless, analysts said the support was more of a technical aberration, as selling pressure takes a break after generating losses of over 60 cents in the past nine days, analysts added.

 

Otherwise, activity remained light, with prices easing back near session lows down the stretch on end-of-day position evening, floor sources said.

 

On tap for Friday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 7:30 a.m. CST (1330 GMT). Analysts surveyed by Dow Jones Newswires anticipate weekly U.S. soybean exports between 650,000 and 850,000 metric tonnes for the week ended Jan 12. Meanwhile, some floor traders were talking up the potential for sales over 1,000,000 tonnes.

 

The DTN Meteorlogix forecast said the threat of hot and dry weather in Parana and Mato Grosso do Sul has eased considerably, with rainfall of up to 1 1/2 inches headed for Parana and Rio Grande do Sul through Saturday.

 

Argentina's central soybean belt will have dry weather to finish out the week but will then head into a pattern of showers between Sunday and Tuesday with up to one-half inch of precipitation. Recent heavy rains in Argentina brought a major reduction in the threat of drought damage to crops for this season, Meteorlogix said.

 

In pit trades, ADM Investor Services bought 200 march, Fimat bought 300 March, and Tenco bought 600 March. Term Commodities sold 300 May, ABN Amro sold 400 March, Calyon Financial sold 300 March, and Iowa Grain sold 900 March.

 

South American soybean futures ended flat. The March futures ended unchanged at US$5.97.

 

 

Soy Products

 

Soymeal futures ended modestly higher, staging a minor bounce from Wednesday's low. The March future managed to filter into a gap left on technical charts from Wednesday as the market consolidated in quiet trade.

 

Soyoil futures ended lower but still managed to consolidate, trading an inside day on technical charts. Consolidative action was the theme of the day throughout the soy complex, but the weight of burdensome inventories allowed soyoil to lose product share to soymeal. March oil share dropped to 37.14%, and the March crush was at 59 1/4 cents.

 

Analysts also expect soymeal export sales between 25,000 and 125,000 tonnes and sales between zero and 10,000 tonnes for soyoil in Friday's weekly export sales report.

 

In soymeal trades, ADM Investor Services, JP Morgan, Prudential Financial and USA Trading were featured buyers. Bunge Chicago was a key seller. Commodity funds were net buyers on the day.

 

In soyoil trades, Bunge Chicago, Refco and Kottke were key buyers, with Cargill, Citigroup, Man Financial, Refco, RJ O'Brien and Rand Financial featured sellers.