July 13, 2006

 

CBOT Soy Review on Wednesday: Consolidates lower on technical sales

 

 

Chicago Board of Trade soybean futures finished Wednesday's session moderately lower, slipping back from prior advances on technically inspired selling and spillover weakness from wheat.

 

July soybeans ended 4 cents lower at US$6.03, November soybeans finished 3 cents lower at US$6.29 1/2, December soymeal settled unchanged at US$179.90 a short tonne, while December soyoil ended 28 points lower at 28.12 cent a pound.

 

The lack of any significant surprises in U.S. Department of Agriculture's supply and demand report coupled with ideas near-term Midwest weather conditions will not have a major impact on soybean crops at this time and weakness in wheat put market technicians in control of price direction, analysts said.

 

Futures have been fighting their gains all week, with strong resistance at the top of the November futures recent trading range - US$6.39 - attracting selling pressure to promote consolidative trade, said Mike Zuzolo, senior analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

Heat headed for the Midwest in the upcoming weekend is a supportive force, but the critical growing point for soybeans is August, while current weather conditions are more of a focus in corn, Zuzolo said. Technically, futures were a little overbought, and with prices unable to challenge overhead resistance, sellers were comfortable adopting the winning strategy of the past few months of selling near US$6.39 while buying near US$6.00, he added.

 

Meanwhile, a moisture-blocking heat ridge is poised to move into the western Midwest heading into the weekend, but the ridge looks to break up by early next week, said John Dee, meteorologist with Global Weather Monitoring.

 

Temperatures will moderate lower after the mid-90s readings push through the Midwest this weekend, but the cooldown does not look to bring any widespread rains of significance, Dee said. The next chance for any meaningful rains in parched areas of the western Midwest will 8-9 days out, toward the end of next week, Dee added.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report Thursday at 7:30 a.m. CDT. Analysts forecast soybean commitments in a range of 200,000 to 350,000 metric tonnes. Soymeal sales are seen falling in a range of 50,000 to 120,000 metric tonnes and soyoil commitments are expected in a range of zero to 10,000 tonnes.

 

In pit trades, Rand Financial bought 500 November and Merrill Lynch bought 400 November. Rand Financial sold 1,500 November, JP Morgan sold 1,000 November, UBS Securities and RJ O'Brien each sold 500 November. Speculative fund selling was estimated at 4,000 contracts.

 

South American soybean futures ended lower, with the July future settling 3 1/2-cent higher at US$6.39.

 

 

SOY PRODUCTS

 

Soy-product futures ended mixed, with soymeal supported by spreads amid faltering soyoil prices. Soymeal futures edged higher, garnering strength from soyoil/soymeal spread unwinding and supportive export revisions in the USDA's supply and demand report.

 

Soyoil futures stumbled lower, pressured by speculative selling amid overbought conditions. Spread unwinding was a featured attraction in otherwise subdued action, as the market took the opportunity to consolidate recent gains, analysts said. However, the bullish energy impact on the market remains an underpinning feature as biodiesel continues to spark supportive long range demand prospects, traders add.

 

July oil share ended at 43.81%, and the July crush ended at 76 1/4 cents.

 

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

 

In soyoil trades, O'Connor bought 2,000 December and Tenco bought 300 December. Bunge Chicago sold 1,000 December, Fimat sold 700 December, ABN Amro sold 500 December and Citigroup sold 500 August. Speculative funds were net sellers on the day.