June 24, 2006

 

CBOT Soy Review on Friday: New low for week on crop conditions

 

 

Chicago Board of Trade soybean futures ended on the defensive Friday, stumbling to new lows for the week amid favorable near-term crop conditions and the absence of supportive news in the market.

 

July soybeans ended 2 1/2 cents lower at US$5.80 1/2, November soybeans finished 2 1/4 cents lower at US$6.06 1/2, July soymeal settled unchanged at US$176.50 a short tonne, and July soyoil ended 13 points higher at 24.62 cent a pound.

 

Futures lacked supportive influences, with bearish near-term crop conditions, technical pressure and options related selling pinning prices at lower levels, analysts said.

 

Speculative selling was a featured attraction in relatively quiet trade, as the absence of any threatening heat along with scattered rains across the Midwest placed a defensive cloud over the market.

 

Traders said a sideways theme was in place for most of the day, as market participants were on guard for pre-weekend short covering amid the potential for shifts in weather. However, as the day unfolded, futures found little incentive to push higher, with the nearby July future falling below technical support, as the contract gravitated toward the US$5.80 put option strike down the stretch, a CBOT commission house analysts said.

 

There were over 17,000 reasons for prices to edge toward US$5.80, he added.

 

Heading into Friday's session there were 17,468 open positions in the July US$5.80 put option. Friday was option expiration for options on July futures. Options that end in the money at Friday's close will be exercised into futures positions.

 

Meanwhile, the DTN Meteorlogix forecast said very few large-scale weather concerns are seen during the next five days. Forecast models agree on the development of a high-pressure ridge over the far West and upper-atmosphere low-pressure troughing in the eastern U.S. The effect of this upper-air pattern will be very few problems with stressful heat in the corn and soybean belt.

 

However, some areas of the western Midwest (west of the Mississippi River) including most of Iowa, eastern Nebraska and northern Missouri are notably lacking in rainfall during June, and this rainfall deficit will continue to finish out the month, Meteorlogix said. The eastern and southeastern Midwest will be the focus for more rainfall of up to one inch during the weekend, and will have follow-up rains of one-half inch next week. The rains will be accompanied by near- to below-normal temperatures, Meteorlogix added.

 

In pit trades, DT Trading bought 500 November, USA bought 300 November and ADM Investor Services bought 300 July. Merrill Lynch sold 2,200 July, Citigroup and RJ O'Brien each sold 600 November, ABN Amro and Rand Financial each sold 500 November. Speculative fund selling was estimated at 3,500 contracts.

 

South American soybean futures ended lower, with the July future settling 3 cents lower at US$6.02.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed once again, with soyoil/soymeal spreading a feature. Soymeal futures were mixed, with nearby contracts steady and deferred months finding modest pressure to end on the defensive. The market extended its retreat from early June highs, as bearish underlying fundamentals remain a hindrance to upside movement, traders said.

 

Soyoil futures ended higher, with the July future remaining range bound in sideways consolidative trade. A quiet news front failed to spark enthusiasm, with many traders content to sit on the sidelines until fresh news or weather- related problems for 2006 crop emerges to provide clear direction, traders said.

 

July oil share ended at 41.09%, and the July crush ended at 78 1/2 cents.

 

In soymeal trades, RJ O'Brien bought 400 July, and USA bought 300 July. Prudential Financial sold 300 July, RJ O'Brien sold 500 July and Rand Financial sold 300 August and 500 July. Commodity funds were estimated net sellers on the day.

 

In soyoil trades, Citigroup bought 300 July and Rand Financial bought 500 August. Sellers were scattered among various commission houses. Speculative funds were estimated net buyers on the day.