May 9, 2006

 

CBOT Soy Review on Monday: Lower on spec, tech sales

 

 

Chicago Board of Trade soybean futures ended lower across the board Monday, pressured by speculative and technical selling amid bearish fundamentals and a favorable start to the planting season.

 

July soybeans ended 7 cents lower at US$5.99 1/2, July soymeal settled US$1.40 lower at US$177.20 a short tonne, and July soyoil ended 61 points lower at 24.92 cent a pound.

 

The absence of supportive features in the market coupled with weakness in outside markets opened the door for speculative selling following gains in the prior week, analysts said.

 

The theme was consistent from the outset, with technical features moving to the forefront, after the active July future gapped below the psychological US$6.00 per bushel level on technical charts. A favorable start to the 2006 planting season cast further doubt in bullish trader's minds, with burdensome inventories, record plantings and a seasonal decline in exports weighing on prices.

 

Analysts say favorable weekend weather conditions promoted an active planting pace, with many traders and analysts anticipating soybean seedings near or above 25% complete in Monday's U.S. Department of Agriculture crop progress report.

 

Otherwise, the market had few drivers to focus on, with many participants content to square positions heading into Friday's supply and demand reports from the USDA.

 

Meanwhile, the DTN Meteorlogix weather outlook said across the entire central U.S., a series of cold fronts will produce rainfall through the first half of this week. Heaviest rains will be in the Midwest and the eastern Plains wheat regions. Up to one inch of rain will fall from eastern Oklahoma, north-central Texas and eastern Kansas through Missouri, Illinois, Indiana and Ohio. Farther north, rainfall of up to three-quarters of an inch will develop in Iowa, eastern Nebraska and Minnesota.

 

The USDA reported Monday that U.S. soybeans inspected for export in the week ended May 4 totaled 9.376 million bushels down from the prior week's 9.785 million. Indonesia was the destination for 5.588 million bushels of the total inspections. Pre-report estimates forecast the inspection figure would fall within a range from 8 million to 13 million. Accumulated soybean inspections total 761.408 million bushels.

 

In pit trades, JP Morgan bought 800 July, ABN Amro bought 500 July and Merrill Lynch bought 400 July.

 

Man Financial, 1,000 July, Rand Financial sold 1,700 July, Fimat and Shatkin/Arbor each sold 500 July. Commodity funds were estimated sellers of 3,000 contracts. South American soybean futures ended lower. The July future settled 9 cents lower at US$6.25.

 

 

SOY PRODUCTS

 

Soyoil futures ended sharply lower Monday, falling to two-week lows, as the market remains under the influence of movements in the energy sector. Declines in crude oil futures set the stage for the losses, with speculative traders taking profits on prior gains as the energy sector's weakness took the edge off biodiesel enthusiasm. Technical weakness added to the declines, with some traders expressing concern over the build of speculative longs in the market, despite growing stocks.

 

Soymeal futures ended lower, but managed to gain product share at the expense of soyoil. A quiet news front kept meal in the role of a follower, with soymeal/soyoil spreading a feature.

 

July oil share ended at 41.29%, and the July crush was at 64 1/2 cents.

 

In soymeal trades, JP Morgan bought 1,000 July and Man Financial bough 500 July, Rand Financial sold 1,000 July and Man Financial sold 500 July.

 

In soyoil trades, Bunge Chicago bought 700 July, and ADM Investor Services bought 400 July. Man Financial and RJ O'Brien each sold 1,000 July, Tenco sold 1,500 July. Commodity fund selling was estimated at 4,000 contracts.