June 6, 2006

 

CBOT Soy Review on Monday: Down moderately, consolidates Friday's gains

 

 

Chicago Board of Trade soybean futures ended lower Monday, consolidating Friday's speculative fund inspired gains.

 

July soybeans ended 5 3/4 cents lower at US$6.03 1/4, July soymeal settled US$1.50 lower at US$183.90 a short tonne, while July soyoil ended 13 points higher at 25.30 cent a pound.

 

The market staged a modest correction from Friday's overdone gains, with less threatening weather forecasts for Midwest crops serving as the catalyst for soybean's consolidative activity, said a CBOT commission house broker.

 

The downside movement was consistent for most of the day, but underlying strength was generated from the supportive influences of outside inflationary markets. The outside market support limited declines, with a positive technical picture and the uncertainty associated with volatile summer weather encouraging traders to keep precautionary premium in the market, traders added.

 

The inability of futures to find follow through buying once eclipsing resistance at Friday's highs attracted selling pressure, with prices remaining firmly planted in negative territory for the remainder of the day. The theme was consistent in quiet action, with the July future falling through support at its 200-day moving average US$6.02 3/4, before finding strength above the psychological US$6.00 per bushel level.

 

The DTN Meteorlogix weather forecast rainfall of up to three-quarters of an inch in the Midwest during the first part of this week, before showers come to an end by midweek. Temperatures will be mostly normal to above normal in the heart of the corn belt, which will maintain mostly favorable crop conditions. A much hotter, drier, and more stressful outlook is on tap in the Plains through the far western Midwest.

 

In news, Brazil's National Commodities Supply Corp., or Conab, said Brazil's 2005-06 soy crop is 53.8 million metric tonnes, down from their previous estimate, done in May, at 55.2 million tonnes. Meanwhile, farmers in Argentina are on track to collect a record 40.75 million metric tonnes of soybeans this season, the Buenos Aires Cereals Exchange forecast Monday. The forecast is up from 40.4 million tonnes estimated previously.

 

In pit trades, Man Financial bought 2,100 July, Rand Financial bought 800 July, Tenco, JP Morgan and Fimat each bought 500 July.

 

On the sell side, Rand Financial sold 2,000 July, ADM Investor Services sold 600 July, Term Commodities sold 400 July and 800 November, Calyon Financial sold 500 July, Rosenthal sold 400 November and UBS securities sold 500 November. South American soybean futures ended lower, with the July future settling 10 1/2 cents lower at US$6.10 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board Monday, following in the footsteps of soybeans. Soymeal futures ended on the defensive, stumbling lower after holding a supportive tonnee throughout most of the session. Soymeal was initially buoyed by follow through speculative short covering from Friday's session, but succumbed to selling pressure once the buying was exhausted, traders said.

 

Soyoil futures fell in unison with soybeans, pressured by the unwinding of soyoil/soymeal spreads, while sympathetic buying from crude oil futures gains managed to curtail downside movement, analysts said.

 

July oil share ended at 40.75%, and the July crush ended at 79 3/4 cents.

 

In soymeal trades, Iowa Grain bought 1,200 July, Man Financial bought 600 July, 600 August and 500 December, Prudential Financial bought 400 July and Fimat bought 500 July. JP Morgan sold 1.400 July, Bunge Chicago sold 300 July and Rand Financial sold 500 July

 

In soyoil trades, Bunge Chicago bought 600 July, JP Morgan bought 500 July and ABN Amro bought 300 December. JP Morgan sold 400 July, Calyon Financial and Man Financial each sold 300 July and ADM Investor Services sold 200 December.