June 15, 2006

 

CBOT Soy Review on Wednesday: Lower on weather, technical sales

 

 

Chicago Board of Trade soybean futures ended Wednesday's session on the defensive, setting back on technical selling and favorable crop conditions.

 

July soybeans ended 6 1/4 cents lower at US$5.89 1/2, July soymeal settled US$2.20 lower at US$179.20 a short tonne, and July soyoil ended 20 points lower at 24.77 cent a pound.

 

Weather maps continuing to project rains moving from the Plains into the areas that need it in the Midwest later this week cast a bearish cloud over the market, said Bill Nelson, associate vice president at A.G. Edwards and Sons in St Louis.

 

Favorable crop conditions are painting optimistic outlooks for 2006 production, and with gold futures - a leading indicator of speculative interest - declining, downside pressure rippled through commodities markets, analysts said.

 

Technical selling was a key contributor to the declines, with the ability of the July future to pierce through meaningful support levels at the contract's 10-day, 20-day and 50-day moving averages helping to extend the losses. The July future's ability to settle below those key moving averages generated fresh downside technical momentum, traders said.

 

Meanwhile, weather remains the key driver of prices, with the possibility of rain this weekend in areas that need it the most having a bearish impact on prices, Nelson said.

 

Futures were initially supported by outside-market strength and a bullish surprise in the NOPA crush estimate for May, but the market continued to display indecisive, choppy price movement until late selling pressure pinned prices in negative territory.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 7:30 a.m. CDT. Analyst forecast soybean commitments in a range of 100,000 to 300,000 metric tonnes. Soymeal sales are seen falling in a range of 50,000 to 125,000 metric tonnes and soyoil commitments are expected in a range of zero to 10,000 tonnes.

 

In pit trades, RJ O'Brien bought 500 July, Calyon Financial and Rand Financial each bought 300 July, and Fimat and Refco each bought 300 November.

 

On the sell side, UBS Securities sold 2,000 August, and Citigroup and JP Morgan each sold 300 July. South American soybean futures finished lower, with the July future settling 4-cent lower at US$6.12 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, breaking from the mixed tonnee that filtered through the products for most of the day. Soymeal futures settled lower, falling back from earlier gains on late spillover pressure from soybeans. Futures were initially buoyed by the unraveling of the soyoil/soymeal spread and supportive crush data from NOPA. However, an overall sluggish domestic demand pace for soymeal provided little support for prices once soybeans turned lower, traders said.

 

Soyoil futures fell in unison with the rest of the complex, as the market continues to consolidate from healthy speculative long positions, analysts say. Technical pressure and bearish stocks data from NOPA helped cast a defensive tonnee in the market throughout.

 

July oil share ended at 40.87%, and the July crush ended at 77 1/4 cents.

 

In soymeal trades, buying and selling was scattered among various commission houses.

 

In soyoil trades, JP Morgan and Prudential Financial each bought 700 July, Fimat bought 800 July and 600 August, ADM Investor Services bought 300 July. Man Financial sold 1,000 July, Calyon Financial sold 500 July, Rand Financial sold 300 July and 500 August, Rosenthal and ADM Investor Services each sold 400 July. Commodity fund selling was estimated at 3,000 contracts.