March 14, 2007

 

CBOT Soy Review on Tuesday: Lower on fund sales; outside market pressure

 

 

Chicago Board of Trade soybean futures ended lower Tuesday, reversing earlier advances as speculative funds unwound long positions in the face of weakness in outside markets.

 

May soybeans ended 9 1/2 cents lower at US$7.55 1/2. May soymeal settled US$2.40 lower at US$220.80 per short tonne, while May soyoil ended 24 points lower at 30.47 cents a pound.

 

Speculative funds ran for cover after outside markets tumbled, as large speculators reversed a lot of the long positions established Monday and early Tuesday, said Tim Hannagan, analyst with Alaron Trading in Chicago. The fall in stock indices took away the funds' sense of security, Hannagan added.

 

Active contracts scored a reversal on technical charts, stumbling below Monday's lows after setting new highs for the current move in early trade, traders said. Technically inspired selling was a feature, with declines accelerating once support at Monday's lows and futures' respective 10-day moving averages were penetrated, traders added.

 

The speculative community initially bought soybeans on the premise of bullish acreage outlooks ahead of the March 30 plantings report, but with outside markets reversing, speculative funds were uneasy holding fresh longs, Hannagan added.

 

Early price support was associated with soybean/corn spreading ahead of what is perceived to be the biggest planting intentions report in recent history, analysts said. However, with the report three weeks away and funds already holding sizable length in the market, futures had trouble holding gains once outside influences turned sour, said a CBOT floor trader.

 

Meanwhile, the DTN Meteorlogix weather forecast said northern Brazil's states of Mato Grosso and Mato Grosso do Sul have widely scattered showers in store through the end of the week, with above normal temperatures.

 

In southern Brazil, continued rainfall is leading to some problems. Parana province - No. 2 Brazil soybean producer behind Mato Grosso - will have harvest delays during much of the next seven days due to rainfall through Thursday, and followed by another system of wet showers and thunderstorms from Friday through Sunday, Meteorlogix forecasts.

 

On tap for Wednesday, the National Oilseed Processor's February soybean crush report is scheduled to be released at 8:30 a.m. EDT (1230 GMT). NOPA's monthly soybean crush report are expected to slip to about 132.6 million bushels from the previous report due to less crushing days in February, according to a survey of industry analysts.

 

In pit trades, Term Commodities sold 1,000 May, RJ O'Brien sold 1,000 May, UBS Securities sold 80 May, with various firms active sellers on the day. Speculative fund selling was estimated between 3,000 and 4,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, backpedaling in unison with weakness in soybeans. Speculative fund selling was featured in the products, as speculative long liquidation emerged after funds sold in beans and outside market weakness sent jitters through weaker market longs, analysts said.

 

May oil share ended at 40.70% and the May crush ended at 65 1/2 cents.

 

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

 

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