April 13, 2007

 

CBOT Soy Review on Thursday: Settles lower on technical-inspired sales

 

 

Chicago Board of Trade soybean futures ended lower Thursday, succumbing to technically inspired speculative selling, analysts said.

 

May soybeans ended 8 1/4 cents lower at US$7.38 1/4, July soybeans settled 7 1/2 cents lower at US$7.56 1/2, and November soybeans finished 7 1/4 cents lower at US$7.84 1/2. May soymeal settled US$4.20 lower at US$200.90 per short tonne. May soyoil ended 13 points lower at 32.65 cents a pound.

 

The market was pressured by technical weakness, with the backdrop of ample nearby U.S. and global inventories and improved planting outlooks attracting speculative sales, analysts said.

 

The rejection of support at the US$7.50 level basis May futures Wednesday, coupled with the ability of the May contract to penetrate support at the low end of a one-month trading range, uncovered speculative selling pressure, traders say. The declines triggered pre-placed sell-stop orders that briefly pressed prices to double-digit losses.

 

The defensive theme was consistent for the remainder of the day, but prices did trim declines on light position squaring heading down the stretch.

 

Looking ahead, traders said the May contract's ability to settle below US$7.39 1/2, the March low, projects potential price weakness down to the US$7.10 to US$7.20 area, a CBOT floor analyst says.

 

In pit trades, FCStonnee bought 400 July, JP Morgan bought 500 July, Fimat bought 300 May, and UBS Securities bought 300 July. Fortis sold 1,500 May, Rand Financial sold 1,000 November, RJ O'Brien sold 400 May, and UBS Securities and Man Financial each sold 300 May. Speculative fund selling was estimated at 5,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, with the theme of soyoil grabbing product share continuing. Soyoil futures traded lower, but were underpinned by oil/meal spreading, with bullish underlying global vegoil fundamentals and spillover strength from crude oil futures limiting losses, analysts said. Traders said the market is targeting the August 2006 oilshare percentage high at 45.20% as a near-term objective.

 

Soymeal futures stumbled lower, pressured by a combination of technical weakness, spillover from soybeans and oil/meal spreading, analysts say. The active May soymeal future moved well below its 50% retracement level, US$203.50, triggering sell-stop orders to accelerate morning losses, a CBOT floor analyst said. Analysts said the market remains on the defensive amid increased competition in domestic feed channels and expected competition from large South American soy supplies, traders said.

 

May oil share ended at 44.83% and the May crush ended at 63 cents.

 

In soyoil trades, Bunge Chicago bought 1,100 May, JP Morgan bought 1,200 May, 1,300 July and 1,000 December, Fimat bought 500 May, and UBS Securities bought 300 December. Bunge Chicago sold 800 May, RJ O'Brien sold 1,100 May, Rosenthal sold 1,000 December, and Citigroup and Rand Financial each sold 400 May. Speculative fund selling was estimated at 5,000 contracts, while commercial buying was estimated at 5,000 contracts.

 

In soymeal trades, Bunge Chicago bought 300 May, JP Morgan bought 300 May and 400 July, and Iowa Grain bought 400 May. Sellers were scattered among various commission houses, with JP Morgan a seller of 300 July.