July 14, 2006

 

CBOT Soy Review on Thursday: Down; tech sales,wheat, speculative-support absence

 

 

Chicago Board of Trade soybean futures ended lower Thursday, stumbling to one-week lows, pressured by technical selling, spillover weakness from wheat and the absence of speculative buying to support prices, analysts said.

 

July soybeans ended 5 1/2 cents lower at US$5.97 1/2, November soybeans finished 7 1/2 cents lower at US$6.22, December soymeal settled US$3.50 lower at US$176.40 a short tonne, while December soyoil ended 4 points lower at 28.08 cent a pound.

 

The market didn't have the speculative leadership to lead prices to the upside, as weather concerns are not an issue for soybeans at this point, leaving prices to grind lower, said Dan Basse, president AgResource Company in Chicago.

 

Technical weakness was a feature in the declines, with the ability of the most-active November future to penetrate support at Wednesday's low - US$6.22 -uncovering pre-placed sell orders, traders said.

 

Spillover pressure from a sharp fall in wheat prices helped extend the lower theme, with prices stumbling to session lows down the stretch. Without a speculative push, the market continues to find willing sellers on signs of price weakness amid bearish supply-side fundamentals, traders said.

 

Meanwhile, lingering uncertainty attributed to long-range forecasts managed to limit downside pressure as the trade continues to keep risk premium in prices with the crops' critical growing stage still ahead of the market.

 

Nevertheless, the hot and dry forecasts for the Midwest are more a threat to corn than beans at this time, as it's still too early in the growing season to do any serious damage to soybean crops, Basse added.

 

The DTN Meteorlogix Weather Service forecast said the hottest conditions for the year so far are expected in the Midwest and Plains for the rest of the week, through the weekend and into next week. In the eastern Midwest, recent and ongoing scattered rainfall in that region will help slow the depletion of soil moisture from the dry and hot weather coming this weekend and through next week, Meteorlogix said.

 

On tap for Friday, the National Oilseed Processors Association is scheduled to release its June crush report at 7:30 a.m. CDT. The average of estimates from analysts surveyed by Dow Jones peg the crush at 128.5 million bushels, with soyoil seen declining to 2.456 billion pounds.

 

In pit trades, ABN Amro bought 400 November, Rand Financial bought 500 November and various commission houses each bought 300 November. UBS Securities sold 1,300 January, Merrill Lynch sold 500 November, and Man Financial and FCStonnee each sold 400 November. Speculative funds were estimated net sellers on the day.

 

South American soybean futures ended lower, with the July future settling 6-cent lower at US$6.33.

 

 

SOY PRODUCTS

 

Soymeal futures ended lower across the board, falling in unison with the declines in soybeans. The market lost product share to soyoil once again, with technical weakness and a lack of fundamental support undermining prices, analysts said.

 

Soyoil futures ended higher aside from the most-active December future, underpinned by bullish enthusiasm associated with biodiesel's energy impact on the market. Rising crude oil futures prices helped promote the firm tonnee, with spreading between the products adding price support in an otherwise sideways trading session, traders said.

 

July oil share ended at 44.23%, and the July crush ended at 77 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with ADM Investor Services a featured seller of 1,200 December. Speculative funds were estimated sellers of 1,500 contracts.

 

In soyoil trades, Man Financial and Rand Financial each bought 400 December, Fimat bought 300 December, JP Morgan and Rosenthal each bought 300 August, and Tenco bought 300 September and 300 December. ADM Investor Services sold 600 December, Bunge Chicago sold 500 December, ABN Amro sold 400 August and Fimat sold 300 December. Speculative funds were estimated buyers of near 3,000 lots.