April 10, 2007

 

CBOT Soy Review on Monday: Settles lower on technical pressure, acres talk

 

 

Chicago Board of Trade soybean futures ended lower Monday, carving out double-digit losses on technical selling and concerns over potential acreage shifts to soybeans.

 

May soybeans ended 11 1/2 cents lower at US$7.49, and November soybeans finished 11 1/2 cents lower at US$7.93 1/4. May soymeal settled US$3.60 lower at US$209.40 per short tonne. May soyoil ended 34 points lower at 32.08 cents a pound.

 

The technical picture for soybeans has turned slightly negative recently, and that theme was extended on concerns weather delays to corn plantings and crop damage for wheat crops could lead to added soybean acres, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

The inability of neighboring grains to sustain early price strength coupled with active futures penetrating nearby support opened the door for speculative selling to emerge, traders added.

 

The market attempted to test the low end of a month-long trading range, Kleist said. The market had no outstanding news to feed off, and once other grains became unglued, soybeans fell apart, Kleist added.

 

Technically, soybeans fell to their lowest level since mid-March, with declines accelerating once mini psychological support at the US$7.50 level basis May futures were breached, traders said. Position squaring ahead of Tuesday's crop report limited some weakness, but without some other support, futures looked to target the bottom end of recent trading ranges, analysts added.

 

The DTN Meteorlogix forecast calls for a slow warm-up in temperatures to near normal for the season. Soil temperatures will be very slow to respond following a recent decline into the 20s and 30s Fahrenheit across much of the Corn Belt.

 

Light rain showers, with moisture of up to one-half inch, will develop Monday night and Tuesday in the Midwest. A second and more potent rain system will move across the region during the last half of the week. This system promises to bring up to 1 1/2 inches of rain to an area from central Iowa east to Ohio. Field work progress across much of the highest-producing corn acreage in the Midwest will again be stymied. Delays in field work and corn planting are notable in contrast to the recent trend of early corn planting, Meteorlogix reports.

 

On tap for Tuesday, USDA is scheduled to release its April supply and demand report 8:30 a.m. EDT (1230 GMT). The average analysts estimates from a Dow Jones Newswires surveys pegs the 2006-07 soybean ending stocks at 586 million bushels, down from the March estimate of 595 million. The estimates ranged from 562 million to 615 million bushels.

 

In pit trades, FCStonnee bought 300 July, UBS Securities bought 600 July.

 

JP Morgan sold 400 May, Shatkin/Arbor sold 500 May, Man Financial sold 300 May, and Tenco sold 300 July. Speculative fund selling was estimated near 3,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended lower in unison with soybeans. Soyoil futures stumbled to two-week lows, pressured by light speculative selling pressure. The absence of any fresh fundamental news, spillover from soybeans and the bearish influence of sharply lower crude oil futures served as catalysts to pin prices in negative territory, analysts said.

 

Soymeal futures ended lower as well, keeping pace with the defensive tonnee circulating through the complex. Light speculative and technical selling were defensive influences to send prices grinding lower, traders said.

 

May oil share ended at 43.37% and the May crush ended at 64 1/2 cents.

 

In soyoil trades, JP Morgan bought 1,200 May, Citigroup bought 400 May, and Fimat bought 300 July. Bunge Chicago and Tenco each sold 400 May. Speculative funds were estimated sellers of between 1,000 and 2,000 contracts.

 

In soymeal trades, Bunge Chicago and JP Morgan each bought 300 May, with Bunge Chicago a seller of 300 May contracts.