June 23, 2007

 

CBOT Soy Review on Friday: Tumbled lower; funds extend selling spree

 

 

Chicago Board of Trade soybean futures fell in Friday's trade, as speculative sellers embarked on another selling spree that sent prices falling over 2 1/2% on the day.

 

July soybeans settled 21 1/2 cents lower at US$7.97, and November soybeans finished 21 cents lower at US$8.30 3/4. July soymeal settled US$8.80 lower at US$217.40 per short tonne. July soyoil ended 31 points lower at 34.73 cents a pound.

 

For the week, July soybeans were down 50 1/4 cents, November soybeans dropped 50 cents, July soymeal is US$18.00 lower and July soyoil is 115 points lower on the week.

 

The theme was consistent, with large speculative traders exiting previously purchased contracts amid the lack of fresh bullish news and favorable near term weather for soybean crops in parched areas of the eastern Midwest and Delta, analysts said.

 

Over the last week, the markets had put in good value or risk premium in prices amid perceived thoughts of ongoing dryness east of the Mississippi River. However, beneficial rains currently moving eastward across the crop belt and outlooks for a heat ridge to only last for a short time next week, took the edge off the market, analysts added.

 

Spillover weakness from neighboring grain futures added to the bearish theme, with technically motivated selling featured as well, traders said. The ability of futures to breach underlying technical support levels, uncovered pre-placed sell stop orders that helped feed the selling frenzy, dropping prices to one month lows, traders added.

 

The DTN Meteorlogix forecast calls for rainfall Friday and Saturday to reach locally heavy proportions of two inches-plus in the Mississippi Valley, and up to three-quarters of an inch across Indiana and Ohio, where it will be heavier in southern areas, lighter in the north. In terms of final moisture amounts, there will be some big differences across the region. The rain looks to bring a benefit for more than a few days to Illinois, but less of a benefit to Indiana and Ohio.

 

Next week, the U.S. Corn Belt will again warm up, with temperatures averaging from normal to above normal. The rainfall, after this weekend's weather system, will be most promising west of the Mississippi River. In this half of the Midwest, rainfall will be normal to above normal. East of the Mississippi, moisture will be less normal to below normal, Meteorlogix forecasts.

 

Meanwhile, scattered showers and thunderstorms are expected to increase across the Delta next week as a split in the ridge develops with a piece off to the east of the region and another off to the west. This will allow for gulf moisture to find its way into the region. This rainfall will improve conditions for pollinating corn and developing soybeans, Meteorlogix reports.

 

In pit trades, Tenco bought 2,000 July. ADM Investor Services sold 1,000 November, RJ O'Brien sold 2,000 November, Citigroup and Fimat each sold 500 November, Rand Financial and UBS Securities each sold 400 November, and Rosenthal sold 500 July. Speculative fund selling was estimated near 16,000 contracts.

 

SOY PRODUCTS

 

Soy product futures stumbled lower, falling on long liquidation as speculative funds trimmed length in the markets, analysts said. A reduced weather threat for soybeans attracted sellers throughout the entire soycomplex. Soymeal tumbled, loosing nearly 4% of its value, as speculative selling sent prices to new lows for the month.

 

Soyoil futures settled lower as well, backpedaling to over one-month lows, as speculative selling was consistent throughout the complex. However, soyoil did capture some product share on soyoil/soymeal spreading, traders said.

 

July oil share ended at 44.41% and the July crush ended at 63 1/4 cents.

 

In soymeal trades, Bunge Chicago bought 400 December, Rosenthal bought 500 December, and JP Morgan bought 300 July and 500 August. Bunge Chicago sold 500 August and 500 October, Fimat and RJ O'Brien each sold 1,000 December. Speculative fund selling was estimated near 6,000 contracts.

 

In soyoil trades, Bunge Chicago bought 700 August, Citigroup bought 600 July, Penson GHCO bought 1,200 July and Prudential Financial bought 1,000 September. Bunge Chicago sold 1,500 December, ADM Investor Services sold 500 July and 300 December, Man Financial sold 1,200 July and UBS Securities sold 1,300 August. Speculative fund selling was estimated at 5,000 lots.