June 27, 2006

 

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

 

 

Chicago Board of Trade soybean futures ended sharply lower Monday, as the market extracted risk premium from prices amid favorable crop conditions and technical weakness.

 

July soybeans ended 11 cents lower at US$5.69 1/2, November soybeans finished 12 cents lower at US$5.94 1/2, July soymeal settled US$4.60 lower at US$171.90 a short tonne, and July soyoil ended 18 points lower at 24.44 cent a pound.

 

Beneficial weekend rains, outlooks for additional showers across the Midwest during the week coupled with mild temperatures set the stage for good growing conditions, and with crop ratings expected to improve, buyers ran for cover, analysts said.

 

Speculative selling was a featured attraction over the course of the day, with the ability of the active November contract to penetrate key technical support at the US$6.00 level opening the door for the market's plunge to 2 1/2- month lows, traders add.

 

The theme was consistent throughout the day, with little fresh supportive news to provide price strength keeping the defensive tonnee intact. However, analysts said the market remains respectful of potential surprises in Friday's acreage and stocks report, and with a long growing season ahead, downside potential was limited.

 

Meanwhile, the DTN Meteorlogix forecast said temperatures will remain near to below normal this week. Daytime highs will reach no higher than the mid-80s Fahrenheit. There will also be a few periods of light, scattered showers. Corn and soybean development will see no major stress factors for month's end, Meteorlogix said.

 

The U.S. Department of Agriculture reported Monday that U.S. soybeans inspected for export in the week ended June 22 totaled 8.405 million bushels, down from the prior week's 9.802 million. Pre-report estimates forecast the inspection figure would fall within a range from 7 million to 12 million.

 

After the close, USDA is scheduled to release its weekly crop progress report 4 p.m. EDT (1500 GMT). Analysts anticipate soybean crop ratings will come in 1 to 2 percentage points higher. USDA said 67% of the U.S. soybean crop was in good-to-excellent shape in last week's report.

 

In pit trades, Fimat bought 1,000 November, UBS Securities bought 1,000 July, ADM Investor Services and FCStonnee each bought 50 November.

 

On the sell side, ADM Investor Services and RJ O'Brien each sold 1,000 November, Citigroup sold 1,000 July, JP Morgan sold 2,000 November, Rand Financial sold 1,500 November, Calyon Financial sold 800 November. Commodity funds sold an estimated 8,000 contracts.

 

South American soybean futures ended lower, with the July future settling 11 cents lower at US$5.91.

 

 

SOY PRODUCTS

 

Soy product futures succumbed to the same bearish theme as soybeans. Soymeal futures took on the roll of leader to the downside in the products, with active speculative selling pinning prices in negative territory. Spillover momentum from soybeans, tame demand and technical weakness served as the bearish influences to drop nearby prices to three-week lows, traders said.

 

Soyoil futures ended lower, but managed to gain product share amid the pressures in soymeal. General selling pressure in the complex set the tonnee for the day, but spreading between the products and higher crude oil futures provided light support to limit losses, analysts said.

 

July oil share ended at 41.55%, and the July crush ended at 77 1/2 cents.

 

In soymeal trades, Fimat bought 800 December, JP Morgan bought 500 July and 500 August. Calyon Financial sold 1,000 August, Iowa Grain sold 2,000 December, Man Financial sold 800 December, and Fortis sold 700 July. Commodity fund selling was estimated near 6,000 contracts.

 

In soyoil trades, ADM Investor Services bought 400 July, Citigroup bought 500 December, Tenco bought 500 July, UBS Securities and Fimat each bought 300 December. Tenco sold 700 July, Tradelink sold 700 December, Calyon Financial sold 400 December.