February 6, 2008

 

CBOT Soy Review on Tuesday: Consolidates lower; weak outside markets

 

 

Chicago Board of Trade soybean futures ended lower Tuesday, consolidating from Monday's sharp rise, with weakness in outside markets weighing on prices.

 

March soybeans ended 3 cents lower at US$13.23, July soybeans finished 3 1/2 cents lower at US$13.55 and November soybeans ended 4 1/2 cents lower at US$12.90. March soymeal settled US$0.20 higher at US$353.10 per short tonne. March soyoil finished 36 points lower at 55.40 cents per pound.

 

The influence of a stronger U.S. dollar, weakness in metal, energy and equity markets provided enough pressure to encourage speculative profit taking, analysts said.

 

However, two-sided trade was seen during the course of the day, with losses limited by spillover support from limit up wheat futures, tightening ending stock outlooks and weather uncertainties for South American crops, analysts added.

 

The bullish psychology of the market allowed futures to carve out new highs for the current move, but without fresh supportive inputs and lingering recessionary fears, sellers applied pressure to weigh on prices, traders said.

 

Nevertheless, each break in prices uncovered buying to stall downside movement, as bullish momentum and soaring wheat prices keep sellers leery of fresh buying emerging amid the longer range bullish fundamental make up of the market, analysts added.

 

Looking forward, traders will keep a close eye on outside markets in the absence of fresh news, but with the battle for spring acres looming, movements in corn and wheat futures will remain a focus as well, traders said.

 

The DTN Meteorlogix weather forecast said soybean areas of central Argentina have some new hot and dry weather to deal with. Conditions Tuesday and Wednesday, will be hot, with temperatures reaching well into the 90s Fahrenheit. There is a good chance for thunderstorms with up to one inch of rain later this week, followed by cooler conditions for the weekend, Meteorlogix forecasts. However, long-range charts for early to the middle of next week feature generally dry conditions with above-normal temperatures.

 

Meanwhile, heavy rains continue to raise concerns for maturing soybeans in Mato Grosso and Goias of northern Brazil, as well as for harvest delays. This sector, from Parana north through Mato Grosso, will have continued episodes of showers and thunderstorms during most of next week, Meteorlogix reports.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 1,000 lots.

 

 

SOY PRODUCTS

  

Soy product futures ended mixed, with soyoil backpedaling on profit taking from Monday's run to new all-time highs. Soyoil futures ended lower, but well off its lows, as consolidative action was the theme of the day, analysts said. Weakness in outside markets, with energy futures lower and a strong U.S. dollar enticed traders to book some profits, analysts added. Nevertheless, bullish longer range demand outlooks remain a supportive feature to limit downside movement, a trader added.

 

Soymeal futures ended narrowly mixed after chopping around on either side of unchanged levels. Spreading between the products was a featured attraction, with unwinding of some oil/meal spreads providing an underpinning boost to soymeal, analysts said.

 

March oil share ended at 43.96% and the March crush ended at 63 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, JP Morgan bought 400 May and Newedge USA LLC bought 500 May. Newedge USA LLC sold 600 July. Speculative fund selling was estimated at 2,000 lots.