Februday 1, 2006

 

CBOT Soy Review on Tuesday: Drifts lower; consolidates prior gains

 

 

Soybean futures on the Chicago Board of Trade ended moderately lower Tuesday, in a consolidative retreat from prior gains.

 

March soybeans finished 4 1/2 cents lower at $5.94 1/4, March soymeal settled $3.20 lower at $185.00 a short tonne, while March soyoil ended 15 points higher at 22.35 cent a pound.

 

The absence of fresh speculative fund buying that buoyed prices previously, changing weather outlooks for Argentina coupled with weak market fundamentals set the stage for a modest pull back in prices, said a CBOT commission house broker.

 

The unwillingness of traders to press the short side of the market as long as index fund buying remains on the radar, limited downside momentum and kept futures in a consolidation mode, traders added.

 

The defensive theme took shape from the outset, with carryover weakness from overnight trade and forecasts for beneficial rains to move into Argentine growing areas by the weekend, took some edge off prices. This was consistent, with declines briefly accelerating once pre-placed sell stop orders were activated as the most active March future backpedaled into a chart gap below Monday's low - $5.93 1/2.

 

Otherwise, a quiet news front failed to provide any incentives for buyers to offset the declines for most of the day, with many traders sitting on their hands in relatively quiet action awaiting a clearer picture of Argentine crop conditions and speculative fund interest, analysts said.

 

The DTN Meteorlogix forecast said during the next three days, rainfall chances have improved compared with previous forecasts for Argentina. The outlook calls for rainfall of one-quarter to three-quarters of an inch across the central corn and soybean belt of Argentina between Tuesday and Thursday. Additional light showers are possible during the next weekend as well.

 

As the showers develop, temperatures will cool to near to above normal values; thus, the crop stress outlook is improved compared with the hot and dry situation of last weekend. Crop weather will be notably more favorable than in previous forecasts, Meteorlogix added.

 

In pit trades, ABN Amro bought 500 March, Fimat bought 300 March, and Refco division of Man Financial bought 1,000 March and 700 May. ABN Amro sold 500 May, Calyon Financial and Refco each sold 500 March, with Rand Financial selling 300 March. South American soybean futures ended lower. The March futures finished 5 cents lower at $6.24.

 

SOY PRODUCTS

 

Soymeal futures stumbled lower in consolidative action, peeling back Monday's action, as speculative buying took a breather after a three-day price bounce.

 

Soyoil futures ended higher across the board, bouncing back from earlier declines, as the absence of follow through selling once the March future satisfied a technical objective of filling chart gap below Monday's low attracted buying interest. Spreading between the soy products aided the supportive tone as well, traders said.

 

March oil share ended at 37.66%, and the March crush was at 58 1/2 cents.

 

In soymeal trades, Fimat bought 900 March and Man Financial bought 300 March. JP Morgan, RJ O'Brien and Rand Financial were featured sellers.

 

In soyoil trades, ADM Investor Services bought 300 December, Calyon Financial and Rand Financial each bought 300 March. ADM Investor Services, Bunge Chicago, ABN Amro were featured attractions.