March 8, 2008

 

CBOT Soy Review on Friday: Limit down; extends corrective phase

 

 

Chicago Board of Trade soybean futures ended sharply lower Friday, locked at limit-down levels, continuing its corrective phase in another day of speculative long liquidation.

 

March soybeans ended 102 cents lower at US$13.41, May soybeans settled 50 cents lower at US$14.08 3/4, July soybeans finished 50 cents lower at US$14.21 and November soybeans ended 50 cents lower at US$13.11 1/2. May soymeal settled US$20.00 lower at US$350.30 per short tonne. May soyoil finished 200 points lower at 63.33 cents per pound.

 

The market followed the lead of soyoil once again, with futures in the midst of a significant correction from record highs set Monday, analysts said.

 

The market is perceived to have achieved its short-term upside mission after urgently rallying to buy acres and after soaring on world vegoil concerns, said Bill Nelson, grains analyst with Wachovia Securities in St. Louis.

 

Futures took their cue from Asian markets this week, and once China and Malaysian soybean and vegoil markets stumbled, U.S. markets retreated as well, he added.

 

Technically inspired selling was featured early, with buyers running for cover after prices moved below support levels, as traders - facing out-of-pocket losses - anxiously tried to cover positions, analysts added.

 

The market was locked limit down for most of the day, shifting traders' attention to the options market to manage risks, with the active May futures synthetically trading in a range of US$13.57 to US$13.62. July soybeans were synthetically trading between US$13.70 and US$13.73 on the close in the options pit, traders said.

 

Meanwhile, concerns over slowing export demand and improved South American production prospects served as another feature to keep speculative funds looking to trim length in the market, traders added.

 

Nevertheless, futures remain in a long-term bull market, and the fundamentals of the market will have to come into play to stop the losses, with traders closely watching Asian soy and vegoil markets Sunday night for leadership, Nelson added.

 

In pit trades, speculative fund selling was estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures tumbled once again, with both soyoil and soymeal dropping to their lower daily trading limits. Soyoil futures were the downside leader once again, succumbing to long-liquidation pressure amid carryover weakness from sharp overnight declines in Asian vegoils markets, analysts said. The market opened limit down and remained at those levels throughout the day. Speculation surrounding China releasing soyoil reserves into its cash market coupled with overbought conditions and fears of slowing export demand helped extend the market's current correction phase, analysts added.

 

Meanwhile, traders anticipate the weakness to continue unless Asian vegoil markets rebound Sunday night, a trader added. May soyoil futures were synthetically trading at 61 cents per pound and July was reported at 62 cents a pound in the options pit on the close.

 

Soymeal futures followed a similar path, dropping limit down on speculative selling attributed to spillover pressure from the rest of the soy complex, analysts said. May soymeal futures were synthetically trading between US$344.00 and US$345.00 per short tonne and July was reported between US$351.00 and US$352.00 a short tonne in the options pit.

 

May oil share ended at 47.48% and the May crush ended at 58 1/2 cents.

 

In soymeal trades, speculative fund selling was estimated at 3,000 lots.