June 1, 2007

 

CBOT Soy Review on Thursday: Drifts lower on end-of-month profit-taking

 

 

Chicago Board of Trade soybean futures ended modestly lower Thursday, setting back from an initial run to new highs on end-of-month profit-taking, analysts said.

 

July soybeans settled 2 cents lower at US$8.06 1/4, and November soybeans finished 3/4 cent lower at US$8.36 1/4. July soymeal settled US$0.10 higher at US$216.90 per short tonne. July soyoil ended 15 points higher at 35.71 cents a pound.

 

The market lagged behind corn and wheat Thursday. The unwinding of soybean/corn spreads and exhausted speculative buying interest near session highs opened the door for profit-taking pressure to surface and send prices retreating lower, said Mike Zarembski, futures analyst with optionsXpress Inc. in Chicago.

 

Fund buying was the catalyst that led prices higher initially, and once that dried up, selling accelerated with end-of-the-month position squaring uncovering speculative sales, analysts added.

 

Bullish technical momentum, concerns over potential weather issues and outlooks for a drawdown of soybean stocks in the new crop year provided the fundamental spark to keep buyers in command of prices early, analysts said.

 

The new-crop November futures rallied to a new contract high, while the most active July futures climbed to a new three-month high.

 

However, as the day unfolded, two-sided trade ensued with market struggling to sustain lasting direction as traders squared a few positions at month's end, analysts added.

 

The DTN Meteorlogix forecast calls for light rain showers in the eastern Midwest during the next five days. Moisture will total no more than one-half inch in the region, with the heaviest rainfall in Illinois. Dry areas of Indiana and Ohio will receive only light rains, not enough to alleviate the moisture shortages in these areas during the past few weeks. The outlook through June 10 continues a generally dry weather pattern for this region.

 

The western Midwest has a more generous rainfall outlook. Thundershowers will develop Friday into Saturday, with up to 1 inch of rain in this sector of the Midwest. During the 6- to 10-day time frame, much of the western and northern Midwest, including northern Iowa, is in line to receive above-average rainfall. This pattern will benefit the crop moisture situation going into the first half of June, Meteorlogix reports.

 

On tap Friday, U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires anticipate commitments in the 200,000 to 1,100,000 metric-tonne range.

 

In pit trades, ADM Investor Services bought 700 July, Man Financial bought 500 November, Fortis bought 400 July and 300 November, and JP Morgan, Penson GHCO and Term Commodities each bought 300 November. ADM Investor Services sold 800 July and 800 November, Tenco sold 300 July and 500 November, Iowa Grain sold 500 July and UBS Securities sold 500 November.

 

 

SOY PRODUCTS  

 

Soy product futures ended mixed, with soyoil gaining light product share on speculative buying. Price support from overnight gains in Malaysian palm oil futures set the tone for early price strength amid bullish outlooks for global vegoils demand, analysts said. However, the market's inability to test contract highs attracted selling pressure to limit upside potential, analysts added.

 

Soymeal futures ended narrowly mixed, pulling back from early gains on spillover from soybeans and light soyoil/soymeal spreading, traders said.

 

July oil share ended at 45.15% and the July crush ended at 63 3/4 cents.

 

In soymeal trades, JP Morgan, Fimat and Man Financial each bought 300 July. RJ O'Brien sold 300 December, Rand Financial sold 300 August, and UBS Securities sold 500 July.

 

In soyoil trades, Fimat bought 800 July, Tenco and Rand Financial each bought 300 July. JP Morgan and Iowa Grain each sold 400 July. Speculative fund selling was estimated at 2,000 lots.