March 27, 2007

 

CBOT Soy Review on Monday: Lower on technically inspired speculative sales

 

 

Chicago Board of Trade soybean futures stumbled lower Monday, succumbing to technically inspired speculative long-liquidation pressure.

 

May soybeans ended 11 cents lower at US$7.58 1/2, November soybeans finished 11 3/4 cents lower at US$8.01 1/4, and November 2008 soybeans ended 12 1/4 cents lower at US$8.24 1/2. May soymeal settled US$4.00 lower at US$215.30 per short tonne, while May soyoil ended 29 points lower at 31.67 cents a pound.

 

The market had no fresh fundamental news to underpin prices, and once technical support was penetrated, sell stops were activated, with speculative long liquidation a feature, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

Spillover weakness from faltering corn futures added to the defensive tonnee, but traders said the ability of the nearby May future to slip below its 50-day moving average for only the second time since Jan. 11 served as the catalyst to accelerate fund sales.

 

The funds took the opportunity to square up a few positions ahead of Friday's plantings and stocks reports, with weaker longs running for cover, traders said.

 

Nevertheless, even with tired longs liquidating some positions, the active May future rebounded to settle above its key 50-day average down the stretch, providing encouragement to bullish traders, Kleist added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said rain will pick up in the western Midwest on Tuesday, before turning drier again Wednesday. In the eastern Midwest, conditions are drier Monday with some light showers expected Tuesday, while turning drier on Wednesday.

 

More rain, up to an inch-and-a-half, is expected across the Midwest starting Thursday. These conditions will give a boost to soil moisture, but will keep tractors out of the field, Meteorlogix forecasts.

 

In pit trades, ADM Investor Services bought 500 May, Fimat bought 300 July, and Fortis bought 400 July. Calyon Financial and Fortis each sold 500 May, and Rand Financial sold 2,500 May. Speculative fund selling was estimated between 5,000 and 6,000 lots.

 

SOY PRODUCTS

 

Soy product futures backpedaled lower in unison with soybean futures. Soymeal stumbled lower under the influence of weakness in soybeans, with technically related fund long liquidation dropping the nearby May future to its lowest point since Feb. 2.

 

Soyoil futures ended lower across the board, consolidating Friday's surge to new contract highs. The active May future traded an inside day on technical charts, garnering pressure from the rest of the soy complex, traders said. However, strength in crude oil futures coupled with soyoil/soymeal spreading limited downside movement, analysts said.

 

May oil share ended at 42.38% and the May crush ended at 63 1/2 cents.

 

In soymeal trades, Fimat bought 500 May, with JP Morgan, RJ O'Brien, and UBS Securities each buyers of 200 May. Fimat sold 800 May, ADM Investor Services sold 200 July, and Citigroup sold 300 July. Speculative fund selling was estimated near 3,000 lots.

 

In soyoil trades, JP Morgan bought 1,300 May, Bunge Chicago and Iowa Grain each bought 300 May, and Shatkin/Arbor bought 400 May. JP Morgan sold 1,000 August, Fimat sold 500 May, UBS Securities sold 400 May.