May 16, 2006

 

CBOT Soy Review on Monday: Lower on outside markets, fundamentals

 

 

Soybean futures on the Chicago Board of Trade stumbled Monday, falling to a one-week low in reaction to broad based weakness in outside inflationary markets and the bearish influence of burdensome ending stock projections.

 

July soybeans ended 8 1/2 cents lower at US$6.04 1/2, July soymeal settled US$0.40 lower at US$177.40 a short tonne and July soyoil ended 70 points lower at 25.49 cents a pound.

 

The defensive theme was consistent from the outset, with the slide in metals and energy futures opening the door for a setback, traders said.

 

The market didn't get any bullish support from Friday's supply and demand report, as the impact of big carryout forecasts and the absence of outside market support finally started to allow futures to be influenced by its fundamentals, said Jack Scoville, analyst with the Price Group in Chicago.

 

Technically related selling was a featured attraction as well, with futures managing to satisfy a technical objective of filling a chart gap between US$6.01 1/2 and US$6.04 left from Tuesday basis the July contract.

 

Fundamentally, futures are still faced with bearish outlooks, with lower than expected weekly export inspections, seasonal declines in crushings as well as record projected new crop acreage providing little incentive for buyers to challenge the influence of broad based commodity weakness, traders added.

 

Meanwhile, the DTN Meteorlogix weather outlook said the western Midwest will have mainly dry weather through the last part of this week. Temperatures will slowly warm up to near- to above-normal values by Thursday and Friday, and continue the trend of generally warmer weather during this coming weekend. Conditions for field work and plant growth will improve over this sector of the region.

 

In the eastern Midwest, conditions will be slower to improve for field work, planting and early crop growth. Showers will continue in the region through Wednesday, followed by brief drying before showers resume on Friday into the coming weekend. Rainfall during the last part of the week will total up to three-quarters of an inch. This moisture, along with showers which brought half-inch rains to the eastern Midwest during the past weekend, will inhibit field work and keep early crop development slow, Meteorlogix said.

 

The USDA reported Monday that U.S. soybeans inspected for export in the week ended May 11 totaled 7.172 million bushels, down 28.8% from the prior week's 10.069 million. Pre-report estimates forecast the inspection figure would fall within a range from 8 million to 13 million. Accumulated soybean inspections total 769.569 million bushels, down 20.7% from the 977.034 million amassed at the same time last year.

 

In pit trades, Rand Financial bought 1,000 July, Merrill Lynch bought 500 July, JP Morgan bought 400 July, Citigroup and DT Trading each bought 300 July.

 

On the sell side, Rand Financial sold 1,000 July, Fimat sold 600 July, Man Financial sold 700 July, ABN Amro and RJ O'Brien each sold 500 July, Tenco and ADM Investor Services each sold 300 July. Commodity funds were net sellers on the day. South American soybean futures ended sharply lower, with the July future settling 29 cents lower at US$6.04. In the first day of side-by-side trading for South American soybeans, the market was untraded.

 

 

SOY PRODUCTS

 

Soyoil futures were a dominant force in the soy complex once again Monday, stumbling hard on speculative selling in reaction to losses in crude oil futures. Futures gapped lower on technical charts, with the market continuing to feed off the movement of the energy sector, with speculative traders covering positions amassed on the bullish biodiesel enthusiasm associated with rising crude oil prices, analysts said.

 

Soymeal futures ended narrowly mixed, managing to gain some product share on the unwinding of soyoil/soymeal spreads amid the retracement of soyoil prices. Otherwise futures had little news related influences to provide price direction.

 

July oil share ended dropped to 41.81%, and the July crush ended at 66 1/4 cents.

 

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

 

In soyoil trades, UBS Securities bought 1,500 July, ADM Investor Services bought 400 July, Calyon Financial, Fimat, and Man Financial each bought 300 July. Refco sold 1,000 December, Fimat sold 700 July, Man Financial sold 900 July, Citigroup sold 500 July, Calyon Financial and RJ O'Brien each sold 400 July, with JP Morgan and Tenco each sellers of 300 July. Commodity funds were estimated sellers of 3,000 lots.