March 20, 2008

 

CBOT Soy Review on Wednesday: Plunge lower; funds lighten length in market

 

 

Chicago Board of Trade soybean futures backpedaled Wednesday, falling to their 50-cent-lower daily trading limits, as speculative funds continued to lighten their heavy buildup of long positions in the market.

 

May soybeans settled 50 cents lower at US$12.57, July soybeans finished 50 cents lower at US$12.72 and November soybeans ended 50 cents lower at US$11.90. May soymeal settled US$19.80 lower at US$330.50 per short tonne. May soyoil finished 200 points lower at 56.40 cents per pound.

 

May soybeans were synthetically trading between US$12.24 and US$12.26 on the close, traders said. May soyoil was synthetically trading in a range of 55.50 to 56.25.

 

The uncertainties of the U.S. economy, the tightening of bank credit for hedge funds, weakness in Asian vegoil markets as well as a firmer U.S. dollar, served as catalysts to produce broad-based selling across commodities in general, analysts said.

 

Limit-down losses were scored across all major CBOT grain and soy futures with sharp losses booked in crude oil and metal markets as well, traders said.

 

The market is in an area where nothing is going on with planting, growing or harvesting of U.S. crops, and that puts increased focus on outside influences, particularly with economic jitters filtering through the market place, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The fundamentals have taken a back seat, with the liquidation of fund length the dominant force until the market gets into a fundamental mindset next week, as the trade gears up for the March 31 planting and stocks report, Hannagan said.

 

Looking ahead, the market will remain under the influence of speculative fund activity Thursday, and if you see moderating outside markets, soybeans should find stability on short covering, Hannagan said. However, if the outside markets remain under pressure, soybeans could limp into the extended holiday weekend, he added.

 

On tap Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Trade estimates put soybean export sales at 200,000 to 450,000 metric tonnes. Soymeal sales are projected in a range of 75,000 to 125,000 metric tonnes, with soy oil sales expected in a 5,000- to 20,000-tonne range.

 

In pit trades, JP Morgan bought 1,000 November and Tenco bought 300 May. FCStonnee sold 300 July, and MF Global sold 300 May. Speculative fund selling is estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures plunged lower, succumbing to speculative long liquidation pressure amid broad-based selling from funds across the commodity sector. Soyoil futures were the downside leader once again, garnering additional pressure from weakness in Asian vegoil markets amid ideas the global vegoil rally has shown signs that it has peaked, analysts said. Soymeal futures stumbled in tune with the rest of the complex.

 

May oil share ended at 47.58% and the May crush ended at 47 cents.

 

In soymeal trades, JP Morgan and Newedge USA each sold 1,000 May. Speculative fund selling was estimated at 4,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 2,000 lots.