June 1, 2006

 

CBOT Soy Review on Wednesday: Lower; market lacks support

 

 

Chicago Board of Trade soybean futures ended lower across the board Wednesday, quietly retreating on speculative sales amid the absence of supportive features in the market.

 

July soybeans ended 4 cents lower at US$5.79 1/2, July soymeal settled US$0.50 higher at US$172.40 a short tonne, while July soyoil ended 24 points lower at 25.16 cent a pound.

 

The lack speculative and fundamental support left futures drifting lower, as bearish planting and emergence rates, and record ending supply outlooks kept a defensive tonnee in the market amid the lack of support from precious metals and the energy sector, said Vic Lespinasse of A.G. Edwards and Sons in Chicago.

 

The lower theme was consistent from the outset, with lower inflationary markets and above-average seeding and emergence reported by the U.S. Department of Agriculture laying the groundwork for the declines.

 

However, overall activity was fairly subdued, with the session's highs and lows established in the first half-hour of trading. The active July future gapped lower on technical charts, satisfying a near-term objective of penetrating support at the US$5.80 level, a trader said. This proved to be the feature of the day, with prices hovering in a range, with late pressure from a plunge in wheat futures helping keep pressure on prices, he added.

 

Meanwhile, the DTN Meteorlogix weather outlook calls for up to one inch of rain, with locally heavier amounts, from the Texas Panhandle northeast to the eastern Great Lakes area on Wednesday. Following the shower occurrence, conditions will turn drier over the entire central U.S. to finish out this week. Besides the shower occurrences this week, temperatures will be very warm, in the range of 84-92 degrees Fahrenheit in the Midwest. The warm temperatures will combine with recent showers to produce a favorable environment for crop development, Meteorlogix added.

 

In pit trades, Term Commodities bought 500 July and Citigroup bought 1,000 July. Rand Financial and Refco each sold 1,000 July, Fortis sold 1,000 November, ADM Investor Services, ABN Amro and Man Financial each sold 500 July. Commodity fund selling was estimated between 4,000 and 5,000 contracts.

 

South American soybean futures ended lower, with the July future settling 3 cents lower at US$5.92.

 

 

SOY PRODUCTS

 

Soyoil futures ended lower, peeling back from prior gains in unison with the declines in crude oil futures Wednesday. The market continues to display a strong relationship with the energy sector, said a CBOT commission house broker. That energy link tied to biodiesel enthusiasm allowed futures to hold within its recent trading range, despite a minor setback, he added.

 

Soymeal futures ended modestly higher, benefiting from soyoil/soymeal spread unwinding amid the losses in soyoil, said Lespinansse. Otherwise, the market had few drivers with fundamental news quiet, traders added.

 

July oil share ended at 42.19%, and the July crush ended at 76 1/2 cents.

 

In soyoil trades, O'Connor bought 1,600 July, Fimat bought 400 July and ADM Investor Services bought 300 July. Tenco sold 1,000 July, RJ O'Brien sold 500 July, and Citigroup sold 400 July.

 

In soymeal trades, JP Morgan bought 600 July, and Fimat bought 300 July. JP Morgan and Rand Financial each sold 500 July, and RJ O'Brien sold 300 July.