May 3, 2006

 

CBOT Soy Review on Tuesday: Lower; retreats from early gains

 

 

Chicago Board of Trade soybean futures ended a two-sided session lower across the board Tuesday, retreating from earlier gains on late local and speculative selling amid the market's inability to challenge overhead resistance.

 

July soybeans ended 3 3/4 cents lower at US$6.03, July soymeal settled US$1.50 lower at US$177.50 a short tonne, and July soyoil ended 15 points lower at 25.73 cent a pound.

 

The market managed to consolidate from prior gains, as bearish underlying fundamentals emerged as a limiting factor to upside movement, said John Kleist of Kleist Agricultural Consulting.

 

Futures were initially pressured by a swifter-than-expected planting pace reported by the U.S. Department of Agriculture on Monday. However, continued strength in outside inflationary markets attracted speculative buying to quickly propel futures into positive territory.

 

The theme was consistent for most of the day, but the market's failure to find enough buying interest to test prior highs uncovered selling pressure to pin prices at lower levels down the stretch, traders said.

 

Meanwhile, outlooks for Brazil's National Commodities Supply Corp., or Conab, to reduce its Brazilian soy-crop projections when it releases its grain- and soy-crop estimate on Wednesday remained an underpinning feature as well as fairly strong nearby technicals, added Kleist.

 

Nevertheless, a record planting pace, record projected acreage and record carryout projections managed to provide enough of a deterrent to limit upside potential, Kleist added.

 

Meanwhile, the DTN Meteorlogix weather outlook said several occurrences of showers and thundershowers are in store for the Midwest, mostly in northern areas through the Mississippi Valley and east into Illinois, Indiana and Ohio. Heaviest precipitation will be in the Ohio Valley, with up to 1 1/2 inch of rain Tuesday through early Wednesday.

 

Western areas of the Midwest (Iowa, Nebraska) will have mainly warm and dry weather through Thursday. This pattern, on the heels of the slow-soaking rains last week, will allow for some planting progress during the middle part of the week, Meteorlogix said.

 

In pit trades, Citigroup and Fimat each bought 500 July, JP Morgan bought 400 November, and O'Connor, UBS Securities and DT Trading each bought 400 July.

 

On the sell side, ADM Investor Services, FCStonnee, Fimat, Merrill Lynch, Prudential Financial and DT Trading were featured sellers on the day. South American soybean futures ended lower. The July future finished 5 3/4 cents lower at US$6.20.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, with soymeal futures giving back earlier gains on local and speculative selling amid spillover pressure from a late drop in soybean prices.

 

Soymeal were underpinned by soyoil/soymeal spread unwinding for most of the day, but once the activity was exhausted, futures failed to find enough support to sustain the advances, traders said. Soyoil futures were under pressure for most of the day but still managed to gain product share once the dust settled, as soymeal stumbled late.

 

July oil share ended at 42.02%, and the July crush was at 70 1/2 cents.

 

In soymeal trades, Man Financial bought 1,000 July, Prudential Financial bought 2,000 July, Fortis bought 500 July and Calyon Financial bought 300 July. Fimat sold 800 July, and JP Morgan and Bunge Chicago each sold 300 July.

 

In soyoil trades, ADM Investor Services, Man Financial and Prudential Financial each bought 600 July, Tenco bought 700 July, and JP Morgan, Citigroup, ABN Amro and Citigroup each bought 400 July. Bunge Chicago sold 700 July, Fimat and JP Morgan each sold 500 July and Citigroup sold 400 December.