July 16, 2009

 

CBOT Soy Review on Wednesday: Stumbles on speculative profit-taking

 

 

Chicago Board of Trade soy futures ended lower Wednesday, reversing strong early gains on speculative profit-taking.

 

CBOT August soys ended 14 cents lower at US$10.20 1/2 a bushel, and November soys finished 13 1/2 cents lower at US$9.04 1/2. In pit trades, speculative fund-selling was estimated at 4,000 lots in soys, and 1,000 lots in soymeal. Speculative fund-buying was estimated at 1,000 lots in soyoil.

 

December soymeal ended US$7.60 lower at US$275.40 a short tonne. December soyoil finished 34 points higher at 34.80 cents a pound.

 

The market was carried higher initially on strength in outside financial markets, but once near-term upside objectives were satisfied and ideal weather for crop development was factored into the equation, buyers ran for cover, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Fresh export demand to China added to the early gains, but without any additional news to trade off of, traders took a cautious approach, with some of the lowest-rated crops in the central U.S. set to see beneficial weather, Hannagan said.

 

Technical selling accelerated the losses near midday, as the inability of the market to sustain chart support in the face of bullish outside markets and export news uncovered preplaced sell-stop orders, traders said.

 

Traders are taking a cautious approach in the face of market uncertainty, opening the door for volatile price swings on any sign of exhausted buying or selling.

 

The DTN Meteorlogix forecast calls for more favorable weather conditions across the Midwest. The pattern features mild temperatures and periodic showers. Hot temperatures, if any, will be brief and mainly confined to western and southern areas. Dryness is confined to portions of Minnesota and the Great Lakes, with favorable soil moisture supplies elsewhere.

 

The Delta crop region is in line for cooler weather and increasing shower activity during the next few days, Meteorlogix said.

 

On tap for Thursday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended July 9 in a range of 450,000 to 700,000 metric tonnes. Soymeal export sales are seen between 75,000 and 200,000 tonnes, while soyoil sales are pegged between 20,000 and 80,000 tonnes.

 

 

Soy Products

 

Soy product futures were mixed, with adjustments in the meal/oil spread relationship featured. Soymeal futures backpedaled in step with soys, succumbing to speculative selling in the absence of fresh news, despite lingering concerns about tight availability of quality supplies, analysts said.

 

Soyoil futures bounced, climbing on the bullish influence of sharp gains in crude oil futures, underlying demand and the unwinding of meal/oil spreads, traders said.

 

December oil share was 38.67%, while the November/December soy crush ended at 84 1/2 cents.