June 14, 2006

 

CBOT Soy Review on Tuesday: Lower on weather, outside markets

 

 

Chicago Board of Trade soybean futures took on a defensive stance Tuesday, consolidating Monday's gains on less-threatening weather forecasts and spillover from liquidation in outside commodity markets.

 

July soybeans ended 4 1/4 cents lower at US$5.95 3/4, July soymeal settled US$0.20 higher at US$181.40 a short tonne, and July soyoil ended 33 points lower at 24.97 cent a pound.

 

The weakness in outside inflationary markets set the initial tonnee with better chances for rain in the Midwest next week providing additional pressure to entice participants to trim risk premium from prices, analysts said.

 

Traders said it's hard to find willing buyers when outside indicators are pointing lower. Tumbling precious metals prices, weakness in crude oil were key influences as well as weather models offering better chances of rain with temperatures not as hot as previously forecasts for next week.

 

However, the exhaustion of early selling pressure enabled futures to briefly trade above unchanged levels. The July future's ability to push above the psychological US$6.00-per-bushel level uncovered buy-stop orders to run prices to session highs, traders said.

 

This was a short-lived occurrence, as selling pressure at the highs reversed the trend and sent prices stumbling into negative territory for the remainder of the day, traders add.

 

Meanwhile, during the next five days, the DTN Meteorlogix forecast calls for only isolated showers across the U.S. Midwest. Temperatures will range from near to below normal in the eastern Midwest (east of the Mississippi River), to above normal in the western Midwest. High temperatures will reach the middle 90s Fahrenheit by the end of this week in Iowa, Nebraska and the Dakotas. This warm and dry trend will produce mixed results for crops: favorable conditions in the east, but stressful in the west. Soil-moisture supplies in the western Midwest are notably deficient, Meteorlogix said.

 

Next weekend through the first part of next week brings the next notable chance for rain in the Midwest, and the Delta. A slow-moving weather system is on track to develop on the Pacific coast and progress across the southern Rockies from Saturday through Monday of next week. This system has the potential to bring showers and thunderstorms to the central and eastern Plains across the Midwest, Meteorlogix said.

 

In pit trades, Term Commodities bought 700 August, JP Morgan bought 700 July and Man Financial bought 300 November. Citigroup and Rand Financial sold 300 July. South American soybean futures ended higher, with the July future settling 5 1/4-cent lower at US$6.16 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed Tuesday, with soymeal gaining product share at the expense of soyoil. Soymeal futures edged higher, managing to shake off the effects of broad-based commodity weakness on the unwinding of soyoil/soymeal spreads, analysts said.

 

Soyoil futures stumbled lower, under pressure from speculative selling as the market trimmed length in step with the theme circulating through world commodity markets, traders said. The speculative enthusiasm of biodiesel fuel took a step back Tuesday, as lower crude oil prices makes biodiesel less attractive, analysts add.

 

July oil share ended at 40.77%, and the July crush ended at 78 cents.

 

In soymeal trades, Calyon Financial bought 600 July and 300 December, Goldenberg Hehmeyer bought 300 December. Sellers were scattered among various firms.

 

In soyoil trades, JP Morgan bought 400 July, with ADM Investor Services and ABN Amro key buyers. Citigroup sold 400 Julys and 400 December. Commodity funds were net sellers on the day.