March 24, 2007

 

CBOT Soy Review on Friday: Lower on end-of-week positioning

 

 

Chicago Board of Trade soybean futures ended mostly lower Friday, backpedaling from earlier gains on end-of-the-week position squaring.

 

May soybeans ended 2 1/4 cents lower at US$7.69 1/2, November soybeans finished 2 1/4 cents lower at US$8.13, and November 2008 soybeans ended 2 1/2 cents lower at US$8.36 3/4. May soymeal settled US$4.10 lower at US$219.30 per short tonne, while May soyoil ended 68 points higher at 31.96 cents a pound.

 

The funds took a few profits off the table, as the absence of follow through buying once futures climbed to a new high for the month uncovered speculative profit taking, analysts said.

 

Spillover weakness in neighboring grains aided the market's turnaround, with speculative fund selling reported across most CBOT ag markets, analysts added. Futures rallied to new highs for the month in early trade, fueled by borrowed momentum from soyoil, technical strength and lingering speculation surrounding potential U.S. acreage, traders said.

 

Nevertheless, the absence of fresh news promoted a choppy atmosphere until speculative sales surfaced to pin prices in negative territory down the stretch.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said the immediate weather picture for the Midwest points to a wet weekend, good for soil moisture, but in the eastern Midwest, it's continuing to be very wet, which will delay fieldwork and cause some local flooding. The Southeast and Delta regions are seeing warm and dry conditions, which will boost planting activity, and according to DTN Meteorlogix, soil temperatures are high enough for germination.

 

In pit trades, Citigroup bought 1,000 July, and UBS Securities bought 500 July, with buying scattered among various commission houses. Selling was scattered among various firms.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed Friday, with the products showing a sharp diversion in direction. Soyoil futures produced a stellar upside performance, with active contracts rallying to new contract highs. The soyoil market propelled in unison with an early spike in crude oil futures, analysts said. Crude oil's rise through a three-month high provided a spark to attract fund buying, pushing the nearby contract through technical resistance, and that triggered a wave of pre-placed buy stop orders, traders said. Strength in Malaysian palm oil futures and bullish longer-range outlooks for biodiesel were reported providing underlying strength, analysts added.

 

Soymeal futures stumbled lower, retreating from early advances on speculative fund selling. The combination of soyoil/soymeal spreading and technical weakness attributed to futures falling below major moving-average support attracted selling pressure, traders said.

 

May oil share ended at 42.15% and the May crush ended at 64 1/2 cents.

 

In soymeal trades, Fimat bought 1,100 May, Man Financial bought 500 May, and Rosenthal and UBS Securities each bought 200 May. JP Morgan sold 500 May and Bunge Chicago sold 200 May.

 

In soyoil trades, JP Morgan bought 500 May, Tenco bought 1,000 May, UBS Securities bought 1,500 May, Man Financial bought 400 May, and Calyon Financial, Prudential, RJ O'Brien and Fimat each bought 300 May. JP Morgan sold 600 July, Bunge Chicago sold 500 May and UBS Securities sold 200 December. Speculative fund buying was estimated near 6,000 contracts.