July 20, 2006

 

CBOT Soy Review on Wednesday: Speculative sales pressures soy; 3rd straight day

 

 

Chicago Board of Trade soybean futures ended moderately lower Wednesday, extending the market's losing streak to 3 consecutive days on speculative sales.

 

August soybeans ended 3 1/4-cent lower at US$5.85 3/4, November soybeans finished 3 3/4-cent lower at US$6.07 1/4, December soymeal settled US$1.30 lower at US$172.70 a short tonne, while December soyoil ended 26 points lower at 26.92 cent a pound.

 

The absence of supportive features to attract buyers, opened the door the declines, with technical pressures, non-threatening weather outlooks and bearish fundamentals combining to weigh on prices, analysts said.

 

The defensive theme was consistent from the outset, as active contracts tumbled to 3-week lows, with spillover pressure from other grains, and weakness in soyoil providing defensive influences to keep prices pinned in negative territory.

 

Nevertheless, analysts say market technicians remain key drivers of prices, as solid support near the US$6.00 per bushel levels remains an underpinning force to keep prices maintain gist sideways volatile movement in the range of US$6.00 to US$6.39 basis November, said a CBOT commission house broker.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said the heat in the central U.S. will start to dissipate Thursday. Rain is also expected over much of U.S. crop areas by the weekend. The Mississippi River Valley and the eastern Midwest will see the largest amounts, with some areas getting up to one inch, and rainfall in southeast Missouri possibly totaling up to four inches by Sunday, Meteorlogix said.

 

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 150,000 to 400,000 metric tonnes. Soymeal sales are seen falling in a range of 65,000 to 120,000 metric tonnes and soyoil commitments are expected in a range of 2,000 to 6,000 tonnes.

 

In pit trades, Tenco bought 2,000 November, RJ O'Brien bought 1,500 November, and Citigroup bought 700 August.

 

On the sell side, Man Financial sold 2,000 November, JP Morgan and Calyon Financial each sold 1,000 November, Term Commodities and Prudential Financial each sold 500 November. Speculative fund selling was estimated at 2,000 contracts.

 

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

 

 

SOY PRODUCTS

 

Soy product futures were in agreement regarding price direction Wednesday. Soymeal futures stumbled lower, following the lead of soybeans. Light soyoil/soymeal spread unwinding did manage to limit the extent of the day losses, despite the absence of fresh supportive influences in the market, analysts said.

 

Soyoil futures backpedaled lower Wednesday, pressured by speculative sales. The energy impact on the market remains a driver of prices, with weakness in crude oil encouraging participants to trim some length from the market, traders say. Technical weakness added to the defensive theme, with the ability of the active December future to gap below support and fill a chart gap left from June 30 cemented the day's lower tonnee, analysts added.

 

August oil share ended at 43.60%, and the July crush ended at 72 3/4 cents.

 

In soymeal trades, Buyers were scattered among various commission houses. ABN Amro sold 1,000 December, O'Connor sold 1,100 December and Citigroup sold 400 December. Speculative fund selling was estimated at 3,000 lots.

 

In soyoil trades, Fimat bought 1,700 December, ADM Investor Services and Bunge Chicago each bought 700 December. Man Financial sold 1,500 December, Tenco sold 1,200 December, ABN Amro sold 900 December, RJ O'Brien sold 700 December, Fimat sold 600 December, UBS Securities and Rand Financial each sold 500 December. Speculative fund sales were estimated at 6,000 contracts.