May 2, 2008

 

CBOT Soy Review on Thursday: Tumbles; broad-based sales; bearish features

 

 

Chicago Board of Trade soybean futures ended sharply lower Thursday, tumbling on broad-based commodity selling amid outside market influences and technical weakness.

 

May soybeans settled 43 cents lower at US$12.58 3/4, July soybeans finished 43 cents lower at US$12.71 and November soybeans ended 32 1/4 cents lower at US$11.93 1/4. July soymeal settled US$12.70 lower at US$329.50 per short tonne. July soyoil finished 198 points lower at 56.35 cents per pound.

 

The market was pressured by largely negative inputs compounded by recent technical failures to challenge overhead chart resistance, said John Kleist, broker/analyst at Allendale Inc. in McHenry, Ill.

 

The strengthening of the U.S. dollar was another defensive influence, producing selling across commodities in general, analysts said. The dollar was buoyed by ideas the Federal Reserve's future decisions on interest rates will underpin the dollar.

 

The Fed's move Wednesday to trim interest rates, and the language contained in comments from the Federal Open Market Committee, were interpreted by most analysts to mean the rate-easing cycle is over for now.

 

The active July future briefly plunged to its exchange imposed 70 cent lower daily trading limit, with the ability of active contracts to penetrate near term support levels accelerating the losses, traders said.

 

The easing of strike worries amid news Argentina's farmers and the government came to a partial accord Wednesday in talks to avoid a repeat of March's crippling farm strike took away the one supportive feature the market had this week, said Kleist.

 

Futures continue to receive psychological pressure from planting delays in corn that could shift some acres to soybeans, despite reports of a lack of quality soybean seeds in the U.S., Kleist added.

 

Corn/soybean spreading was featured, as the market sends a signal that there is an economic incentive for producers to continue with their planting intentions despite seeding delays, a CBOT floor analyst said. The November soy/December corn spread ratio settled at 1.89 to 1, down from 1.95 to 1 Wednesday.

 

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 sharply Thursday, succumbing to commodity wide speculative selling. The bounce in the U.S. dollar versus other world currencies coupled with technical pressures firmly planted both soyoil and soymeal in negative territory, analysts said. Soyoil futures garnered additional pressure from a drop in crude oil futures and bearish perceptions associated with lower soyoil usage for biodiesel in February, reported by the Census Bureau. Meanwhile, soymeal gained some product share on adjustments in the meal/oil spread and underlying demand, analysts added.

 

July oil share ended at 46.09% and the July crush ended at 73 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 2,000 lots.

 

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