May 5, 2006

 

CBOT Soy Review on Thursday: Sets back, lacks supportive features

 

 

Chicago Board of Trade soybean futures ended lower Thursday, taking a corrective stance from earlier highs amid the absence of supportive features to sustain upside movement.

 

July soybeans ended 1 3/4 cent lower at US$6.03 3/4, July soymeal settled US$0.40 higher at US$177.30 a short tonne, while July soyoil ended 41 points lower at 25.31 cent a pound.

 

Speculative led selling attributed to a break in crude oil futures took the edge off prices, but futures managed to hold up surprisingly well in the face of bearish fundamental outlooks, said Mike Zuzolo, chief analyst with Risk Management Commodities Inc. in Lafayette Ind.

 

The market remains in a consolidative mode, plugging along in a sideways pattern, unable to find enough momentum to aggressively push or pull prices in either direction.

 

There seems to be a stalemate in the market, with a lack of trade common, as sellers remain unwilling to press the market amid ideas cycle lows are in place and bearish fundamentals cap upside movement, Zuzolo added.

 

Choppy price action was a feature for most of the session, with active contracts continuing the theme of holding within Friday's trading range. However, weakness in energy markets, seasonal declines in exports and the absence of institutional buyers allowed futures to backpedal to a lower close, said a CBOT broker.

 

Meanwhile, the DTN Meteorlogix weather outlook said during the next three to five days below to much-below normal temperatures will be common in the northern two-thirds of the Midwest. Lowest temperatures will drop into the mid 30s to low 40s Fahrenheit in the Midwest overnight Friday into Saturday. Frost is possible as far south as northern Iowa. In the eastern Midwest (east of the Mississippi River), low temperatures will reach the low to mid 30s Fahrenheit in Wisconsin and Michigan, and the middle to upper 30s in northern Illinois, northern Indiana and northern Ohio Saturday night into Sunday, Meteorlogix adds.

 

Net weekly U.S. old-crop soybean export sales of 182,500 metric tonnes were 64% above the previous week, but 27% below the prior 4-week average, according to the U.S. Department of Agriculture. Analysts anticipated sales in a range of 100,000 to 250,000 tonnes.

 

In other news, Brazilian soy growers could reduce planting area again in the 2006-07 soy crop - by at least by 5% over current levels - due to liquidity problems, Carlo Lovatelli, president of the Brazilian Agribusiness Association, said Thursday.

 

In pit trades, Man Financial bought 400 July, ADM, Calyon Financial, JP Morgan, O'Connor, Rosenthal and UBS Securities each bought 200 July.

 

On the sell side, Man Financial sold 400 July, RJ O'Brien sold 500 July, Bunge Chicago, Fimat, Goldenberg Hehmeyer, JP Morgan and Rand Financial each sold 200 July. South American soybean futures finished lower. The July future settled 1 cent lower at US$6.27 3/4.

 

 

SOY PRODUCTS

 

Soyoil futures stumbled to one-week lows Thursday, retracing prior gains on speculative and commercial selling. The continued buildup of soyoil stocks as evidenced by the Census Bureau's upward revision to its March stocks figure coupled with selling associated to falling crude oil futures set the stage from the declines, analysts said. The market had previously been buoyed by speculative buys associated with biodiesel enthusiasm, but with crude down buyers began to run for cover, said a CBOT trader.

 

U.S. Census Bureau revised its March soyoil stocks figure, raising the March stocks figure to 2.691 billion pounds from the 2.686 billion pounds originally reported April 27.

 

Soymeal futures ended marginally higher, benefiting from the soyoil/soymeal spread unwinding. The spreading helped soymeal gain product share, with decent weekly export sales generating light support, traders said.

 

July oil share dropped 41.65%, and the July crush was at 64 3/4 cents.

 

In soymeal trades, Bunge Chicago bought 700 July, Man Financial and Tenco each bought 500 July. Sellers were scattered among various commission houses.

 

In soyoil trades, Goldenberg Hehmeyer bought 1,000 July, O'Connor bought 1,400 July, Calyon Financial bought 600 July, ADM Investor Services and Bunge Chicago each bought 400 July. Bunge Chicago sold 1,100 July, RJ O'Brien sold 1,300 July, FCStonnee sold 600 December, Fimat, Goldenberg Hehmeyer, Man Financial and JP Morgan each sold 300 July.