July 19, 2006

 

CBOT Soy Review on Tuesday: Grinds lower; maintains defensive theme

 

 

Chicago Board of Trade soybean futures ended Tuesday's session posting light losses, as the market quietly maintained a defensive theme on technical sales and the absence of supportive features to attract buyers.

 

August soybeans ended 1-cent lower at US$5.89, November soybeans finished 1/4-cent lower at US$6.11, December soymeal settled US$1.20 higher at US$174.00 a short tonne, while December soyoil ended 52 points lower at 27.18 cent a pound.

 

A quiet news front failed to provide any clear direction for futures, with forecasts for cooler temperatures and scattered showers this week across the Midwest and technical weakness combining to keep buyers on the sidelines, analysts said.

 

Futures initially attempted to stabilize following recent declines, but once the early gains showed signs of exhaustion, buyers quickly ran for cover, traders said. Speculative selling was a featured attraction with spillover weakness from outside inflationary markets helping sustain the bearish theme.

 

Otherwise, the market remained fairly subdued, with light end of the day positioning surfacing to trim declines down the stretch, traders added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said by Friday, the central U.S. will be mostly in the 80s and 90s, with a front bringing cooling conditions to the region also providing some rain for the Central Plains and upper Midwest, but not enough to move precipitation levels back to normal, Meteorlogix said.

 

In pit trades, Tenco bought 400 November, ABN Amro and Merrill Lynch each bought 300 November.

 

On the sell side, JP Morgan sold 2,500 November, Citigroup, O'Connor and RJ O'Brien each sold 1,000 November, ADM Investor Services and Fimat each sold 400 November, and Goldenberg Hehmeyer sold 600 November. Speculative fund selling was estimated at 6,000 contracts.

 

South American soybean futures ended lower, with the August future settling 13-cent lower at US$6.25.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed once again, with soymeal and soyoil diverging over price direction. Soymeal managed to gain against soyoil Tuesday, carving modest gains on the unwinding of soyoil/soymeal spreads. The absence of fresh fundamental support has kept pressure on prices, with active contracts setting contract lows before managing to rebound on the subsequent drop in soyoil, traders say.

 

Soyoil futures ended lower across the board, retreating from early advances on weakness associated with declines in crude oil futures. The energy element of the market as it relates to future demand for biodiesel remains a key influence on the market, traders add.

 

August oil share ended at 43.68%, and the July crush ended at 74 3/4 cents.

 

In soymeal trades, Bunge Chicago bought 300 December, Calyon Financial sold 400 December, Fimat and Goldenberg Hehmeyer each sold 300 December and O'Connor sold 1,800 December. Speculative funds were net sellers on the day.

 

In soyoil trades, Rosenthal bought 600 December, Citigroup bought 400 December, Fimat bought 500 December and Rand Financial bought 300 December. UBS Securities sold 1,000 December, Calyon Financial and Tenco each sold 400 December.