February 7, 2008

 

CBOT Soy Review on Wednesday: Lower; falls from limit up, all-time highs

 

 

Chicago Board of Trade soybean futures finished lower Wednesday, ending a volatile trading session on the defensive, as a void of underpinning bids allowed prices to plunge from limit up levels into negative territory.

 

March soybeans ended 4 1/2 cents lower at US$13.18 1/2, July soybeans finished 3 1/4 cents lower at US$13.51 3/4 and November soybeans ended 10 1/2 cents lower at US$12.79 1/2. March soymeal settled US$1.30 lower at US$351.80 per short tonne. March soyoil finished 24 points lower at 55.16 cents per pound.

 

The exhaustion of buying once futures hit limit up levels and set historic highs opened the door for a price correction, as a lack of fresh supportive news to sustain early gains uncovered profit taking and hedge related selling, analysts said.

 

The market had no fresh news to justify a rally to limit up levels, a CBOT floor analyst said. Once the synthetic option price of limit up wheat fell, equities began to show weakness, corn came off its highs, and sellers emerged, the analyst said.

 

Recessionary fears and the uncertainty of being long at all-time highs presented an opportunity for traders to book in some profits, particularly with no fresh supportive news surfacing to inspire traders to keep pushing the market, he added.

 

Without U.S. acreage issues being resolved, and with projected ending stocks tightening and South American crop potential still uncertain, the market continues to maintain a longer term bullish outlook, analysts said.

 

"However, from a technical standpoint, it does not look supportive for prices to close lower after climbing to limit up levels, raising fears of additional selling to emerge overnight," a CBOT broker added.

 

The DTN Meteorlogix weather forecast said heavy rains continue to raise concerns for maturing soybeans in Mato Grosso and Goias in northern Brazil. Southern Brazil and Argentina crop areas have a generally favorable weather pattern during the next week. In southern Brazil, Rio Grande do Sul will have significant rainfall during this weekend, maintaining favorable prospects for its soybean crop, Meteorlogix reports.

 

Argentina's central crop belt will have some fairly hot weather Wednesday, then a letup in the heat Thursday. There still appears to be a fair to good chance for significant thundershower activity during the end of this week and into the weekend, Meteorlogix reports.

 

On tap Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EST. Trade estimates put soybean export sales at 500,000 to 900,000 metric tonnes. Soymeal sales are projected in a range of 100,000 to 150,000 metric tonnes, with soy oil sales expected in 10,000 to 70,000 tonnes range.

 

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

 

SOY PRODUCTS

 

Soy product futures ended lower, backpedaling from sharp early gains in unison with soybeans. Soyoil futures staged a reversal after setting new all-time highs, stumbling lower on the exhaustion of buying at higher levels, traders said. A void of buyers as prices pulled off their highs attracted a wave of selling that easily dropped futures lower in relatively thin trade, analysts said.

 

Soymeal futures backpedaled from its highs in unison with soybeans, pressured by profit taking and hedge related selling, traders 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, with MF Global buying 800 March and JP Morgan a sellers of 300 March and 1,000 May.

 

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