February 2, 2006

 

CBOT Soy Review on Wednesday: Lower on weather, tech sales

 

 

Chicago Board of Trade soybean futures settled lower Wednesday, finishing on the lows as technical weakness and improved crop conditions in Argentina pinned prices in negative territory.

 

March soybeans finished 14 3/4 cents lower at US$5.79 1/2, March soymeal settled US$3.80 lower at US$181.20 a short tonne, and March soyoil ended 53 points higher at 21.82 cent a pound.

 

The market effectively extracted risk premium from prices, with technically motivated selling another feature that sent futures stumbling into the close, analysts said.

 

Beneficial rains in Argentina and forecasts for cooler and wetter conditions to linger through the upcoming weekend in the region provided little fundamental incentives for the market to sustain prior gains.

 

The defensive theme was consistent from the outset, with declines accelerating once futures penetrated underlying technical support levels. The market extended its losses into the close, stumbling to a new low for the week. The active March was able to penetrate support at the top of a chart gap at US$5.80, but selling interest wavered below that mark, despite closing on its lows, traders said.

 

The DTN Meteorlogix forecast said Argentina's southern soybean belt had some thunderstorms develop overnight Tuesday into Wednesday. This is the start of what is shaping up to be a beneficial rainfall pattern during the last part of this week.

 

The Meteorlogix outlook calls for rainfall of up to one inch by early Saturday across Cordoba, Buenos Aires and Santa Fe provinces. This rainfall will be very timely for late-season development of soybeans. In addition, temperatures will recede from very warm readings to normal to below normal values over the next five days, Meteorlogix added.

 

On tap for Thursday, 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 400,000 and 600,000 metric tonnes for the week ended Jan 26.

 

In pit trades, ADM Investor Services and Tenco each bought 500 May, Refco division of Man Financial bought 1,000 March and UBS securities bought 1,600 March. Sellers were scattered across various firms, with ADM, FCStonnee, Fimat, Man Financial, RJ O'Brien, Refco and Tenco featured sellers. Commodity fund selling was pegged between 2,000 and 3,000 contracts.

 

South American soybean futures ended sharply lower. The March futures finished 14 cents lower at US$6.10.

 

 

Soy Products

 

Soymeal futures were lower across the board, stumbling in unison with soybeans. Technically inspired selling was a featured attraction. The ability of the March futures to penetrate underlying support at its 100-day moving average and filter into a chart gap uncovered pre-placed sell orders.

 

Soyoil futures fell sharply Wednesday, falling to a new low for the week in a technical correction from prior gains and spillover weakness from soybeans. The market ended on its lows, with traders anticipating additional selling to emerge amid the contract's ability to settle below its 50-day moving average of 21.84.

 

March oil share ended at 37.58%, and the March crush was at 59 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various firms, with commodity funds net sellers on the day.

 

In soyoil trades, Calyon bought 400 March, Iowa Grain bought 300 March, and Rand Financial bought 500 March. Bunge Chicago sold 300 March, JP Morgan sold 600 March and 300 July, Fimat sold 300 March, and Man Financial and Refco division of Man Financial each sold 500 March. Commodity fund selling was estimated at 3,000 lots.