April 6, 2006

 

CBOT Soy Review on Wednesday: Ends up after two-sided action

 

 

Chicago Board of Trade soybean futures ended Wednesday's session moderately higher, managing to escape volatile, late, two-sided action on speculative buying.

 

May soybeans finished 2 3/4 cents higher at US$5.61 1/2 per bushel, May soymeal settled US$1.30 higher at US$172.30 a short tonne, while May soyoil ended 7 points lower at 22.37 cent a pound.

 

The market managed to stage a minor bounce from oversold conditions, overcoming a late slide to a new 14-month low as fresh buying and short-covering emerged after selling pressure subsided, floor traders said.

 

Futures consolidated for most of the day, finding stability amid a lack of fresh news. However, the weight of record old crop domestic stocks, abundant world supplies, record projected 2006 U.S. plantings and technical weakness combined to rekindle speculative selling.

 

The declines accelerated once nearby May futures penetrated support US$2.57 1/2 - Tuesday's low. However, a lack of follow-through momentum at the lows attracted buying, with local short covering, light commercial interest and commission house buying from Citigroup propelled futures firmly above unchanged levels down the stretch, traders said.

 

Otherwise, activity was relatively quiet, with futures effectively consolidating recent losses after satisfying daily downside price objectives.

 

USDA is scheduled Thursday to release its weekly export sales report for the week ended March 30. Analysts surveyed by Dow Jones Newswires anticipate soybean commitments in a range of 200,000 to 350,000 metric tonnes. Soymeal sales are expected in a range of 60,000 to 125,000 tonnes, and soyoil sales pegged to fall within a range of zero to 10,000 tonnes.

 

Meanwhile, Brazil's soy crop could fall below 55 million metric tonnes, according to analysts at AgroConsult, which conducted private crop tours of Brazilian soy farms. Brazil's National Commodities Supply Corp., or Conab, lowered its 2005-06 crop estimate for the second time in four weeks, cutting its estimate to 55.7 million metric tonnes on Wednesday.

 

In other news, U.S. Soybean Export Council and the Illinois Soybean Association will host a special delegation of Chinese soybean processors at the Chicago Board of Trade Thursday to sign agreements between China and the U.S. soybean industry.

 

In pit trades, Citigroup bought 700 May, Man Financial bought 600 May, Rand Financial bought 500 July, Rosenthal bought 600 May and USA Trading bought 400 May.

 

On the sell side, Calyon Financial sold 1,000 May, Man Financial sold 800 July, JP Morgan and Rand Financial each sold 500 May.

 

Commodity funds were net buyers on the day.

 

South American soybean futures ended higher. The May future finished 4 1/2 cents higher at US$5.86 1/2.

 

 

SOY PRODUCTS

 

Soymeal futures ended moderately higher Wednesday, staging a consolidative short covering bounce from recent declines. Spread activity and sympathetic buying from soybeans aided the market's gains.

 

Soyoil futures drifted lower, pressured by speculative selling and spreading between the products. However, good underlying commercial buying managed to limit downside movement, traders said.

 

May oil share ended at 39.35%, and the May crush was at 63 3/4 cents.

 

In soymeal trades, commodity funds were net buyers with Man Financial, Fimat, Calyon Financial and Rand Financial featured buyers. Man Financial and O'Connor key sellers.

 

In soyoil trades, Bunge Chicago bought 1,000 May, JP Morgan bought 400 May, Fimat sold 400 May, and UBS Securities sold 1,000 May and 1,300 July. Commercial firms were estimated buyers of just under 2,000 contracts while speculative funds were estimated net sellers of 2,500 contracts.