June 7, 2007

 

CBOT Soy Review on Wednesday: Settles lower on profit-taking setback

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, backpedaling from prior highs on speculative profit taking, analysts said.

 

July soybeans settled 6 cents lower at US$8.22 1/4, and November soybeans finished 5 3/4 cents lower at US$8.53 1/2. July soymeal settled US$0.30 higher at US$223.90 per short tonne. July soyoil ended 37 points lower at 35.90 cents a pound.

 

The absence of fresh news to feed bullish appetites coupled with global oilseed profit taking set the stage for the market's declines, a CBOT floor analyst said.

 

With overbought conditions and the absence of any aggressive speculative buying, futures had little support to sustain an upward charge, he added.

 

Futures did manage to set new highs on the open, with lingering concerns over dryness in the eastern U.S. Midwest remaining an underlying theme, analysts said. Long-range outlooks continue to promote bullish optimism, with reduced U.S. acreage and the need to attract increased South American acres as supportive features.

 

However, the market was overdue for a setback, as buying interest was exhausted at session highs, a CBOT trader said. "The market still has a bullish outlook, but needed to catch its breath," he added.

 

Meanwhile, the DTN Meteorlogix weather forecast called for some stressful weather to move into dry eastern Midwest crop areas during the latter half of this week. Temperatures Thursday will reach into the range of 88 to 92 degrees Fahrenheit east of the Mississippi River. This very warm-to-hot snap will be brief, but it highlights the need for timely rainfall in the region, Meteorlogix said in the forecast.

 

That moisture isn't likely to develop, however. Through next week, there is no more than one-half inch of rain in store for Indiana and Ohio. In contrast, the western Midwest will have rains of up to one inch developing Sunday into Monday. Soil moisture remains in good supply west of the Mississippi River and is starting to decline east of the Mississippi, Meteorlogix reports.

 

On tap Thursday, 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 range of 150,000 metric tonnes to 450,000 metric tonnes.

 

In pit trades, Term Commodities bought 1,000 November and JP Morgan bought 500 July. Tenco and RJ O'Brien each sold 500 July, Citigroup and UBS Securities each sold 400 July. Speculative fund selling was estimated at 4,000 contracts.

 

 

SOY PRODUCTS

  

Soy product futures ended mixed, with soyoil sliding lower on a mild correction from overbought conditions. Soyoil futures retreated on speculative-led selling, pressured by global profit taking in world vegetable oil markets, analysts said. Futures were a bit overdone, and without fresh supportive inputs and with overnight weakness in Malaysian palm oil, futures were overdue for a setback, analysts added.

 

Soymeal futures ended narrowly mixed, easing back from early price strength on weakness filtering through the complex, analysts said. However, the unwinding soyoil/soymeal spreads provided strength to keep a floor under prices, traders added.

 

July oil share ended at 44.5%, and the July crush ended at 65 1/4 cents.

 

In soymeal trades, ADM Investor Services bought 300 December and JP Morgan bought 400 August. Fimat sold 600 July, JP Morgan sold 500 September, and Tenco sold 400 July. Speculative funds were estimated net sellers on the day.

 

In soyoil trades, buyers were scattered among various commission houses. Bunge sold 500 May, ADM Investor Services and Citigroup each sold 300 December, JP Morgan sold 300 July, and Fimat sold 400 July and 300 August. Speculative funds were estimated sellers of 4,000 contracts.