June 7, 2006

 

CBOT Soy Review on Tuesday: Lower, outside markets, crop conditions press

 

 

Chicago Board of Trade soybean futures stumbled lower Tuesday, extending its retreat from Friday's price spike on technical selling amid general commodity weakness and favorable crop outlooks.

 

July soybeans ended 9 3/4 cents lower at US$5.93 1/2, July soymeal settled US$3.00 lower at US$180.90 a short tonne, while July soyoil ended 27 points lower at 25.03 cent a pound.

 

The market had a slew of bearish indicators on its plate, with stumbling outside metals and energy prices, strong weekly crop ratings and a favorable weather forecast for crop development setting the stage for the market's lower theme, said a CBOT commission house broker.

 

The lower price action was consistent from the outset, with the ability of futures to penetrate key support levels uncovering pre-placed sell orders as speculative sellers added to their short positions, traders added.

 

The U.S. Department of Agriculture's weekly crop progress report showed the soybean crop was off to a strong start and with off and on showers coupled with mild temperatures forecasted for the week, traders looked to trim some premium from futures.

 

Traders said selling interest accelerated once the July contract penetrated support at the psychological US$6.00 per bushel level, and at the 100-day moving average of US$5.96 before support held at the 40-day moving average US$5.93.

 

The DTN Meteorlogix weather forecast said over the next three to four days, showers and thunderstorms will move across the northern, central and eastern Midwest, with total rainfall approaching 1 to 1 1/2 inches, from the Dakotas and Minnesota south into Iowa and east through Illinois, Indiana and Ohio. Lesser amounts of rain are in store for the Ohio Valley and the northern Mississippi Delta. In general, crop weather conditions will be favorable for the majority of the Midwest, Meteorlogix said.

 

In pit trades, FCStonnee bought 600 November, Calyon Financial and Merrill Lynch each bought 500 July, DT Trading bought 400 July.

 

On the sell side, ABN Amro sold 1,000 July, UBS Securities sold 700 July, ADM Investor Services and Citigroup each sold 500 July. Commodity fund selling was estimated at 4,000 South American soybean futures ended lower, with the July future settling 2 1/2 cents lower at US$6.08.

 

 

SOY PRODUCTS

 

Soy product futures mirrored the movements of soybeans, with the influence of outside markets weighing on prices. Soymeal futures scaled back previous gains, extending its correction from prior gains with the exhaustion of speculative short covering and bearish fundamentals taking the edge off the market, traders said.

 

Soyoil futures continued to trade like an energy component, setting back in unison with the declines registered in crude oil futures. Speculative selling was featured, but good commercial buying managed to limit downside movement, traders added.

 

July oil share ended at 40.89%, and the July crush ended at 79 3/4 cents.

 

In soymeal trades, O'Connor bought 1,000 July, Man Financial bought 600 July and Fimat bought 300 July. Fimat sold 500 July and O'Connor sold 300 July.

 

In soyoil trades, Citigroup bought 500 December, ADM Investor Services and Calyon Financial each bought 300 July. Citigroup, and Man Financial each sold 300 July with Fimat and Tenco each sold 200 July. Commercials were net buyers on the day.