June 20, 2006

 

CBOT Soy Review on Monday: Sharply lower; erases weather premium

 

 

Chicago Board of Trade soybean futures ended sharply lower Monday, stumbling to two-week lows on speculative selling, as the market erased weather premium from prices.

 

July soybeans ended 15 3/4 cents lower at US$5.84 1/2, November soybeans finished 16 cents lower at US$6.11, July soymeal settled US$3.00 lower at US$177.90 a short tonne, and July soyoil ended 66 points lower at 24.20 cent a pound.

 

The market extracted premium from prices, as favorable weekend crop conditions and outlooks for conditions to remain ideal for developing across the Midwest opened the door for the price adjustment, analysts said.

 

The theme was consistent from the outset, with borrowed weakness from outside inflationary markets aiding the defensive tonnee. Activity slowed after the first hour of trade, with futures consolidating above session lows, traders add.

 

The absence of any other fresh fundamental influences kept attention on weather conditions, and with prices able to fall below meaningful support levels, futures remained pinned in negative territory, said a CBOT commission house broker.

 

The DTN Meteorlogix forecast said additional showers and thunderstorms this week promise to periodically bring rainfall of one inch or more to much of the western corn-belt. The rains will combine with cooler temperatures to bring favorable growing conditions for corn and soybeans. The eastern Midwest has additional periods of rainfall ahead for this week, with total precipitation of at least one inch in store. The eastern Midwest has had generally favorable crop weather this season, and this trend will continue, Meteorlogix said.

 

The USDA reported Monday that U.S. soybeans inspected for export in the week ended June 15 totaled 9.653 million bushels, up from the prior week's 8.058 million. Pre-report estimates forecast the inspection figure would fall within a range from 7 million to 11 million.

 

After the close, U.S. Department of Agriculture is scheduled to release its weekly crop progress report 4 p.m. EDT (1500 GMT). Analysts anticipate soybean crop ratings will come in steady to slightly lower. USDA said 67% of the U.S. soybean crop was in good-to-excellent shape in last week's report.

 

In pit trades, ADM Investor Services bought 800 November, FCStonnee bought 500 November, UBS Securities bought 300 July and Stern bought 400 November.

 

On the sell side, FCStonnee sold 500 July, ABN Amro sold 2,000 November, JP Morgan sold 1,000 November, Goldenberg Hehmeyer and Man Financial each sold 500 November, and UBS Securities sold 700 November. Commodity fund selling was estimated near 5,000 lots. South American soybean futures ended lower, with the July future settling 14-cent lower at US$6.14.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board in unison with the declines experienced in soybeans. Soyoil futures were the leader of the products' slide to lower levels, pressured by ideas favorable Midwest crop conditions will produce a good-size soybean crop and keep soyoil supplies ample, trader say. Price pressure from falling crude oil futures took some of the speculative edge attributed to biodiesel out of the market as well, analysts say.

 

Soymeal futures ended lower in step with the rest of the complex, but the unwinding of soyoil/soymeal spreads managed to limit losses, traders added.

 

July oil share ended at 40.48%, and the July crush ended at 73 cents.

 

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

 

In soyoil trades, Goldenberg Heymeyer was a buyer of 2,000 July. ABN Amro and RJ O'Brien each sold 1,500 July, Rand Financial sold 1,000 July, Tenco sold 600 July and 500 September. Commodity fund selling was pegged near 5,000 contracts.