April 18, 2007

 

CBOT Soy Review on Tuesday: Prices slide on technical selling, corn delays

 

 

Chicago Board of Trade soybean futures closed in negative territory Tuesday as nearby contracts pierced through technical support at 100-day moving averages, traders said.

 

Nearby May soybeans slipped 12 cents to US$7.24 per bushel, the contract's lowest close since Jan. 16. July soybeans ended down 12 cents at US$7.41 1/4, and November soybeans settled 12 cents lower at US$7.70 1/2 a bushel.

 

The ability of nearby contracts to trade below their respective 100-day moving averages weighed on prices, as a retreat from early highs in neighboring grain markets helped to extend the declines, an analyst said. Fund and commission house selling also dragged on prices, he said.

 

Commodity funds sold an estimated 3,000 contracts. In pit trades, Fortis sold 500 May, while Iowa Grains sold 300 July. UBS bought 800 July, and Tenco bought 600 July. Fimat bought 300 May and 300 July.

 

There also was pressure on prices from ideas that corn planting delays could lead to additional 2007 U.S. soy acreage, analysts said. Wetness has kept producers out their fields, and a continuation of soggy conditions is seen as bearish for soybeans.

 

As of April 15, corn planting was only 4% complete nationwide, down five percentage points from the five-year average of 9%, according to the U.S. Department of Agriculture's weekly crop progress report, which was released Monday afternoon.

 

"I think worrying about losing corn acres to soybeans could be a shade premature," said Dan Zwicker, senior analyst at AgriVisor Services. "But the market's going to do what the market's going to do."

 

The DTN Meteorlogix forecast for the U.S. corn belt called for mostly dry and mild weather during the next three days. It is the most favorable stretch of spring weather thus far in the region, and conditions will allow for some field work, the weather firm said.

 

Still, the ground in many areas is saturated from recent precipitation, analysts noted.

 

T-Storm Weather also reported in a midday update to its daily forecast that a "significant rain event" for next week remained on track. It would begin next Tuesday or Wednesday in the Corn Belt and continue to hamper corn planting, meteorologists said.

 

Bearish old-crop supplies also are seen as negative for soybeans, Zwicker said.

 

"We've got a lot of inventory around," he said. "Until you put the soybean crop in jeopardy, it could probably be on the defensive."

 

 

SOY PRODUCTS

 

CBOT soy product futures drifted lower across the board in unison with soybeans. Overnight losses in palm oil futures and profit-taking also pressed soyoil early, analysts said. Later, weakness in crude oil was seen as negative for soyoil, they added.

 

Commodity fund selling also weighed heavily on the soy products, traders said. Funds sold an estimated 2,000 soymeal and 5,000 soyoil contracts.

 

In soymeal pit trades, Man Financial sold 400 May, while JP Morgan sold 400 July. ADM and Fimat each sold 300 May. Bunge bought 300 May. In soyoil trades, UBS sold 600 May, and Tenco sold 500 May. Rosenthal and Fimat each sold 500 July, while JP Morgan sold 300 July. Rand Financial bought 400 July.