May 19, 2006

 

CBOT Soy Review on Thursday: Down on speculative, technical sales

 

 

Chicago Board of Trade soybean futures ended lower across the board Thursday, pressured by speculative and technical selling, as the absence of supportive factors kept prices on the defensive.

 

July soybeans ended 6 cents lower at US$5.98, July soymeal settled US$1.10 lower at US$175.30 a short tonne, and July soyoil ended 25 points lower at 25.57 cent a pound.

 

The combination of bearish supply side fundamentals, improved planting outlooks, technical weakness and the lack of outside market support served as the catalysts to keep sellers in command, analysts said.

 

Technical selling was a featured attraction, with the July contract's ability to press through underlying support levels and hold below the psychological US$6.00-per-bushel level gave sellers confidence over the course of the day, traders said.

 

Without the benefit of outside-market support or spill-over strength from wheat and corn, futures were left to grind lower in the face of bearish fundamentals, said a CBOT commission house broker.

 

Meanwhile, decent weekly export sales failed to impact prices, as traders said the commitments were anticipated by the market.

 

Net weekly U.S. old-crop soybean export sales of 332,000 metric tonnes were 15% below the previous week and 51% above the prior four-week average, according to the U.S. Department of Agriculture. Analysts anticipated sales in a range of 200,000 to 450,000 tonnes.

 

The DTN Meteorlogix weather outlook said the next five days will have several periods of showers across the Midwest. In addition, rainfall in the six-to-10-day time frame, through the last weekend of May, offers above-average rainfall for all but the southwest sectors of the region (southern Iowa, northern Missouri, southeast Nebraska, northeastern Kansas). Temperatures will be variable, in the normal range, with no extremes. In general, weather conditions will be favorable for completing planting, along with early growth of corn and soybeans, Meteorlogix said.

 

In pit trades, Bunge Chicago bought 500 July, JP Morgan bought 1,500 July, Rand Financial bought 1,000 July, FCStonnee bought 400 November and ABN Amro bought 400 July.

 

On the sell side, Rand Financial sold 2,000 July, Refco, Calyon Financial, and Fimat each sold 500 July, and ADM Investor Services sold 300 July. Commodity funds were estimated sellers of 3,000 lots. South American soybean futures ended lower, with the July future settling 13 cents lower at US$6.01.

 

 

SOY PRODUCTS

 

Soyoil futures ended lower, pressured by speculative selling, as the market scaled back prior gains amid a lack of supportive inputs to attract buyers following Wednesday's gains. A net sales reduction in weekly export sales and technical pressure added to the defensive tonnee, while solid commercial buying and a turn-around to the upside in crude oil futures limited declines, traders said.

 

Soymeal futures ended lower along with soybeans but managed to gain product share amid weakness in soyoil. The unwinding of soyoil/soymeal spreads and solid weekly export sales provided support to limit downside pressure on prices, analysts said.

 

July oil share ended at 42.17%, and the July crush ended at 69 cents.

 

In soymeal trades, Fimat bought 1,500 July, with scattered buying from various commission houses. JP Morgan sold 300 July, Calyon Financial, Citigroup, and Man Financial each sold 200 July.

 

In soyoil trades, ADM Investor Services bought 400 July, Bunge Chicago bought 700 July, Fimat bought 500 July, JP Morgan bought 900 July and Tenco bought 700 July and 200 December. Bunge Chicago sold 500 July, ABN Amro sold 1,300 July and Refco sold 500 July. Commercial firms were estimated buyers of 2,500 lots with commodity funds reported sellers of 2,000 lots.