June 4, 2007

 

CBOT Soy Review on Monday: Down after setting new contract highs

  

 

Chicago Board of Trade soybean futures ended modestly lower Monday, pulling back from an earlier rally that produced new contract highs, analysts said.

 

July soybeans settled 1 3/4 cents lower at US$8.15 3/4, and November soybeans finished 1 cent lower at US$8.46 1/4. July soymeal settled US$1.00 lower at US$220.40 per short ton. July soyoil ended 6 points lower at 35.75 cents a pound.

 

A quiet news front provided little direction for prices, leaving technical factors as a dominant influence, analysts said.

 

Futures satisfied a near-term upside technical objective of carving out new contract highs, but once the move failed to uncover fresh buy stops at the highs, light profit-taking pressure surfaced, said Chad Henderson, analyst with Prime Agricultural Consultants in Brookfield, Wis.

 

Mild pressure was exerted from beneficial rains moving through the central U.S. during the weekend, but with longer-range forecasts still pointing toward a drier trend in the eastern Midwest and southeastern U.S., selling pressure remained limited, traders said.

 

The market is very respectful of bullish technical signals, with outlooks for a drawdown in global supplies next year trumping abundant nearby inventories, Henderson said. The price strength of the market is not reflective of old-crop fundamentals, as the cash basis in Peoria, Ill., is 66 cents under nearby futures prices, he added.

 

The uncertainty of weather moving forward served as a catalyst to promote two-sided activity, as traders play close attention to crop conditions in a year when every bushel of production will be counted on to sustain an adequate level of inventories in the next marketing year, traders said.

 

The DTN Meteorlogix weather forecast calls for very little follow-up rain from the weekend in the central and eastern Midwest. Temperatures will be variable, which will limit the heat stress on crops. Topsoil moisture is still needed, especially in central and southern Illinois eastward.

 

Upper-atmosphere high pressure is projected to develop over the southeastern U.S. and expand its influence into the eastern Midwest from Sunday through next Thursday. Because of this, a warm and dry weather pattern is in store for the eastern Midwest and the Southeast. This unfavorable rainfall pattern will be accompanied by normal to above-normal temperatures, which is stressful for crops east of the Mississippi River and south of the Ohio River, Meteorlogix reports.

 

The U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EDT on Monday. Analysts anticipate the USDA will show U.S. soybean planting progress wrapping up, with plantings seen 90% to 94% complete.

 

In pit trades, buyers and sellers were scattered among various commission houses, with JP Morgan a buyer and seller of 500 July contracts.

 

 

SOY PRODUCTS

  

Soy product futures ended marginally lower, quietly following the lead of soybeans. Soymeal futures chopped around on both sides of unchanged, in step with soybeans. An early technically inspired push to 2-month highs quickly lost steam as soybean buying interest soon exhausted, analysts said.

 

Soyoil futures experienced a choppy, two-sided theme as well, quietly continuing its consolidation from recent highs. Traders said the market is showing signs of upside exhaustion, as buying interest wavered despite overnight price strength in Malaysian palm oil futures, analysts added.

 

July oil share ended at 44.78% and the July crush ended at 62 1/2 cents.

 

In soymeal trades, Iowa Grain bought 500 July, UBS Securities bought 400 December, ADM Investor Services bought 300 July and Fimat bought 300 December. Tenco sold 300 December and UBS Securities sold 30 July. Speculative funds were net buyers on the day.

 

In soyoil trades, buying and selling was light scattered among various commission houses, with Tenco buying 300 July.