March 7, 2008

 

CBOT Soy Review on Thursday: Soyoil correction drags complex lower

 

 

Chicago Board of Trade soybean futures ended sharply lower Thursday, succumbing to speculative selling pressure in conjunction with spillover from soyoil and technical weakness, analysts said.

 

March soybeans ended 47 1/2 cents lower at US$14.43, May soybeans settled 49 3/4 cents lower at US$14.58 3/4, July soybeans finished 48 1/2 cents lower at US$14.71 and November soybeans ended 30 cents lower at US$13.61 1/2. May soymeal settled US$11.70 lower at US$370.30 per short tonne. May soyoil finished 200 points lower at 65.33 cents per pound.

 

The market backpedaled to one-week lows, retracing prior gains with the downward slide aided by big air pockets that lacked any significant bidders as prices slipped below nearby support levels, traders said.

 

"The market was overdue for a correction, with buyers taking a nervous approach as the upside leader of the soy complex-soyoil coming under heavy selling pressure from speculative funds for the third consecutive day," a CBOT floor analyst said.

 

The market has run out of fresh bullish news to keep prices climbing in the face of weakness in soyoil, traders said. Concerns exports could drop off quickly with fresh South American supplies ready to move into the world pipeline coupled with overbought market conditions raised a warning flag to attract profit taking pressure as well, traders added.

 

In pit trades, buyers and sellers were scattered among various commission houses, with MF Global a seller of 1,000 November. Speculative fund selling was estimated 5,000 contracts. In options MF Global sold 1,500 May US$14 puts, and JP Morgan bought 1,400 July US$14 puts.

 

 

SOY PRODUCTS

 

Soyoil futures tumbled lower for the third consecutive day, as speculative fund long liquidation continued to send prices spiraling to limit down levels. Traders said The May soyoil contract was synthetically bid at 64.50 per pound in the options pit on the close. The soyoil market has shown the classic signs of a mature market, with overbought conditions enticing participants to liquidate some length from the market, said John Kleist of Kleist Ag Consulting. Wednesday's price movement was a tip-off to further liquidation, as very bullish Chinese import news and surging crude oil futures failed to support prices, Kleist added.

 

Signs of slowing export demand based on weekly export sales, nervousness surrounding China's import intentions and general uneasiness with prices at record highs opened the door for traders to shed length once again, analysts added.

 

Soymeal futures stumbled lower as well, retreating in unison with losses in the rest of the soy complex.

 

March oil share ended at 46.46% and the May crush ended at 74 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with JP Morgan a buyer of 1,000 July. Speculative fund selling was estimated at 3,000 lots. In options, Tenco sold 2,000 July 75.00 calls, and Bunge Chicago bought 1,000 May 65.10 calls.