March 21, 2008

 

CBOT Soy Review on Thursday: Plummets 50cent limit on speculative liquidation

 

 

Chicago Board of Trade soybean futures ended sharply lower Thursday, plummeting to their 50 cent lower daily trading limits again on continued speculative long liquidation pressure.

 

May soybeans settled 50 cents lower at US$12.07, July soybeans finished 50 cents lower at US$12.22 and November soybeans ended 50 cents lower at US$11.40. May soymeal settled US$0.40 lower at US$310.30 per short tonne. May soyoil finished 200 points lower at 54.40 cents per pound.

 

May soybeans were synthetically trading between US$12.04 and US$12.06 on the close, traders said. May soyoil was synthetically trading at 54.00.

 

The market is still in a broad-based speculative sell-off, extending its correction from extremely high price levels as speculative funds reduce risk exposure in the market, said Jack Scoville, an analyst at Price Futures Group in Chicago.

 

The firmer U.S. dollar added pressure to prices, as participants who were long commodities and short the dollar are liquidating out of those positions, a CBOT floor analyst said.

 

The uncertainties of the U.S. economy and tightening bank credit for speculative positions were dominant forces, putting fundamentals in the background, traders said.

 

However, talk of China defaulting on some soy purchases, and large South American crops poised to provide competition for U.S. exports supplied bearish underlying features to aide the market's plunge, Scoville added.

 

Looking ahead, traders anticipate fund-selling to slow moving forward, allowing the market to shift its focus to new crop fundamentals ahead of the March 31 prospective plantings report. Traders are anticipating the report will not show enough acres shifted from corn to soybeans to adequately meet projected demand, analysts said.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund-selling estimated at 5,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, with speculative liquidation in soyoil futures a featured attraction. Weakness in world vegoil markets coupled with the broad based speculative liquidation in commodities pinned soyoil futures at their lower daily limits throughout the session, traders said. The nearby May soyoil futures dropped to its lowest level since Jan. 31, and 16.42 cents from its record high set March 3.

 

Soymeal futures ended lower, but held up fairly well in the face of limit-down price moves in the rest of the soy complex, said Jack Scoville, an analyst at Price Futures Group. The liquidation of oil/meal spreads supported meal, he added.

 

May oil share ended at 46.71% and the May crush ended at 74 cents.

 

In soymeal trades, speculative fund-selling was estimated at 2,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund-selling estimated at 3,000 lots, and commercial buying estimated at 1,500 lots.