April 29, 2008

 

CBOT Soy Review on Monday: Plunge amid chatter, technical pressure

 

 

Chicago Board of Trade soybean futures ended sharply lower Monday, backpedaling from opening gains, as bearish market influences combined to pin prices in negative territory.

 

May soybeans settled 42 1/4 cents lower at US$12.83 1/2, July soybeans finished 39 1/2 cents lower at US$12.97 1/2 and November soybeans ended 25 1/2 cents lower at US$11.96 1/2. July soymeal settled US$9.50 lower at US$335.50 per short tonne. July soyoil finished 117 points lower at 58.48 cents per pound.

 

The combination of corn/soy spreading, rumors from Argentina and technical pressures served as catalysts to send prices tumbling to 3-week lows, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The market has a defensive psychology, with traders looking to get long corn versus soybeans on spreads amid thoughts that lingering planting delays could lead to increased soy acres, enticing participants to trim premium from prices, Hannagan added.

 

Meanwhile, rumors that Argentine farmers would postpone a resumption of their strike amid speculation a new window for negotiations between the government and farmers have arisen after Argentina's economic minister was ousted Friday, analysts said. Talk that the Argentine government will adjust the export tax scheme and that the farmers will put off the strike sparked selling in the CBOT soy market, analysts added.

 

Technical pressure extended the losses, with declines accelerating once the most active July contract penetrated support at last week's low of US$13.07 and psychological support at the US$13.00-per-bushel level, traders said.

 

The market is poised to sustain a volatile theme, with near-term weakness expected to linger after key technical support was breached, but with uncertainties surrounding plantings and Argentina downside potential should be limited, traders added.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures fell in unison with soybeans, succumbing to long liquidation and technical pressure, analysts said. Soyoil futures tumbled despite outside support from crude oil and Malaysian palm oil futures, traders say. Rumors of the potential for improved relations between Argentine farmers and their government coupled with thoughts of increased soy acres encouraged traders to reduce risk exposure, analysts added.

 

July oil share ended at 46.57% and the July crush ended at 84 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.