June 9, 2007

 

CBOT Soy Review on Friday: Lower on profit-taking setback

 

 

Chicago Board of Trade soybean futures ended lower Friday, succumbing to profit-taking pressure amid improved weather outlooks and spillover pressure from soyoil.

 

July soybeans settled 10 1/2 cents lower at US$8.21 1/2, and November soybeans finished 10 cents lower at US$8.54 1/2. July soymeal settled unchanged at US$226.20 per short tonne. July soyoil ended 99 points lower at 35.37 cents a pound.

 

Soyoil futures were a drag on soybeans throughout the day, with a little more rain in morning forecasts for next week in the eastern Midwest attracting pre-weekend profit- taking, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

Trade positioning ahead of Monday's supply and demand reports added pressure, as traders trimmed some excess length heading into the weekend, AgResource's Dan Basse added.

 

Overbought technical signals amid record speculative longs in the market added to the declines, with losses in energy and metal markets a defensive influence on prices also, analysts said.

 

Nevertheless, futures ended well off session lows, managing to trim declines on midday weather forecasts that saw some rain potential for the eastern belt next week. The market remains respectful of changing weather forecasts, with futures managing to cut its losses as selling pressure was curtailed at midday, said Scoville.

 

Meanwhile, the DTN Meteorlogix weather forecast said as next week unfolds, a more promising rainfall pattern sets up for the entire Midwest. Showers and thunderstorms will develop west of the Mississippi River on Sunday, and will work eastward during the first half of next week. Rainfall in the western Midwest will total up to one inch, with some locations receiving heavier rains. These showers will be very timely for crop moisture.

 

East of the Mississippi River, light rains with up to one-half inch precipitation will cross the region during Monday through Wednesday. Longer-range forecast charts point to showers developing in Indiana and Ohio during the Wednesday through Thursday time frame, with light to moderate intensity. This outlook is still drier in the eastern Midwest than in the western half of the region; however, it does point to a better chance for moisture over the eastern Midwest, which promises a less-stressful pattern for crops next week than during this past week, Meteorlogix reports.

 

The U.S. Department of Agriculture is scheduled to release its June supply and demand report Monday at 8:30 a.m. EDT. The report isn't expected to cause much of a stir in the soybean futures market, as analysts anticipate only a minor tweak to old- and new-crop balance sheet line items.

 

The average of analysts' estimates peg U.S. 2006-07 U.S. soybean ending stocks at 598 million bushels, down 12 million from May's forecast. The estimates ranged from 580 million to 620 million bushels. The average of analysts' estimates for 2007-08 ending stocks was 328 million bushels from a range of 300 million to 530 million bushels.

 

In pit trades, UBS Securities bought 1,000 November, ADM Investor Services and Tenco each bought 500 July. JP Morgan and Tenco each sold 1,000 July, RJ O'Brien sold 800 July and Rand Financial sold 300 July. Speculative fund selling was estimated near 7,000 contracts.

 

SOY PRODUCTS

 

Soy product futures ended mostly lower across the board. Soyoil futures were the standout for downside movement, with prices backpedaling in unison with a record single-day decline for Malaysian palm oil futures overnight, analysts say. The market staged a profit-taking correction from overbought conditions, with broadbased commodity-wide weakness attracting speculative selling as well, analysts added.

 

Soymeal futures ended mostly lower, but managed to gain product share on soyoil/soymeal spread unwinding. The market was pressured by weakness in the rest of the complex, but talk of potential tightening supplies amid processor down time and adjustments in product spreads underpinned the market, analysts said.

 

July oil share ended at 43.88% and the July crush ended at 65 1/4 cents.

 

In soymeal trades, buyer and sellers were scattered among various commission houses.

 

In soyoil trades, JP Morgan bought 500 July, Penson GHCO bought 400 July, Rand Financial and UBS Securities each bought 600 July, and Fimat bought 300 July. UBS Securities sold 600 July and 400 December, Fimat sold 600 July, Man Financial sold 500 July, and Tenco sold 300 July. Speculative funds were estimated sellers of 3,000 lots.