May 4, 2007

 

CBOT Soy Review on Thursday: Mostly lower; eases as speculative buying exhausted

 

 

Chicago Board of Trade soybean futures ended lower Thursday, retreating from earlier gains as speculative buying was exhausted down the stretch.

 

July soybeans settled 3/4-cent lower at US$7.47 3/4, and November soybeans finished 1/4-cent lower at US$7.76 3/4. July soymeal settled US$0.50 lower at US$200.60 per short tonne. July soyoil ended 4 points higher at 33.63 cents a pound.

 

The market was buoyed by speculative buying for most of the day, with worries over planting delays and the market's fight to stay price competitive with corn underpinning prices, analysts said.

 

However, fund buying was the catalyst that led prices higher, and once that dried up, selling accelerated with end of the day position squaring and technical weakness associated with the July future's drop below its 100-day moving average uncovering speculative sales, analysts added.

 

The market has been clearly focused on new crop fundamentals, with weather and planting uncertainties a dominant influence on prices, traders said. The market is essentially addressing the fact that planting delays in May not only affect corn but also impact soybeans, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Weather forecasts calling for more rain and expanded coverage heading toward next week raised some concerns, with traders attempting to add some risk premium, analysts said. This was consistent, until a lack of follow through buying attracted sellers as bearish old crop supplies remain a hindrance to upside price potential, analysts added.

 

Meanwhile, the DTN Meteorlogix forecast for the Midwest continues with a high prospect of rain during this coming weekend in the Midwest. Rain is headed for the western and northern areas of the Corn Belt beginning Friday and continuing through Saturday. Rainfall of up to one inch will develop in the Dakotas, western Minnesota, northwest Iowa and northern Missouri. A second rain system will bring up to another inch of precipitation from Sunday through Tuesday, again focusing on the upper Midwest, including northern Iowa.

 

Farther east and south, the Ohio Valley will take in another inch of moisture from Thursday through Saturday. Lighter rains will develop in central Illinois through Indiana. Field work delays will be notable in Iowa, the Dakotas, southern Minnesota, the Ohio Valley and eastern Nebraska, Meteorlogix forecasts.

 

In pit trades, Bunge Chicago bought 500 July, Man Financial bought 600 July, Fimat bought 300 July and UBS Securities bought 500 November. Sellers were scattered among various commission houses, with Citigroup a seller of 300 July. Speculative fund selling was estimated at

 

 

SOY PRODUCTS

 

Soy product ended mixed, with soyoil managing to gains product share at soymeal's expense. Soyoil futures ended the session with modest gains, well off early gains that produced new contract highs. Borrowed momentum from Malaysian palm oil's surge to 8 year highs overnight attracted buyers, traders said. However, once the market satisfied its upside objectives and speculative buys eased, profit taking surfaced to trim gains as the day unfolded, traders added.

 

Soymeal ended lower, losing ground to soyoil on spreads, with the exhaustion of early buying support opening the door for prices to retreat into negative territory down the stretch, analysts said.

 

July oil share ended at 45.60% and the July crush ended at 63 1/2 cents.

 

In soyoil trades, buyers were scattered among various commission houses with Fimat a buyer of 1,100 July. JP Morgan and Tenco each sold 300 July, UBS Securities sold 400 July, and Bunge Chicago sold 300 December. Speculative fund buying was estimated at 2,000 contracts.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.