July 26, 2006

 

CBOT Soy Review on Tuesday: Ends up, fails to hold strong early gains

 

 

Chicago Board of Trade soybean futures ended Tuesday's session posting modest gains, but well off earlier highs, as improved near term rain potential took some edge off prices.

 

August soybeans ended 2-cent higher at US$5.85 1/4, November soybeans finished 2 1/4-cent higher at US$6.07. December soymeal settled US$1.70 higher at US$173.80 a short tonne, while December soyoil ended 6 points lower at 27.10 cent a pound.

 

The market found support throughout the day from lingering heat and dryness concerns for soybean plants heading into their critical growth stage, with a drop in crop ratings and technical buying adding to the supportive tonnee, analysts said.

 

However, the inability of the market to uncover aggressive speculative buying once meaningful overhead resistance levels were breached coupled with private weather forecasts increasing short term rain potential in the Midwest weakened prices down the stretch, traders added.

 

Nevertheless, mid- to long-range forecasts continue to point to a warmer and drier weather pattern for the driest areas of the western Midwest, and will continue to lend support to keep sellers cautious until a better feel on crop potential is established, said a CBOT commission house broker.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said over the next 24 to 48 hours, rain should benefit areas around southwest Iowa, northwest Missouri and southeast Nebraska. Temperatures are continuing to be high, with 90s projected for the Plains and lower Midwest, south, for the next couple days. By week's end, a huge swath, from central Texas through most of Oklahoma, Kansas, Nebraska, South Dakota and into North Dakota and Montana will be hitting triple digits, Meteorlogix said.

 

The eastern Midwest, while still hot, is in better shape with temperatures in the mid 80s to low 90s and light rain forecast scattered throughout much of the area by Saturday, according to the DTN rainfall maps, Meteorlogix reported in the forecast.

 

In pit trades, O'Connor and UBS securities each bought 1,000 November, USA bought 2,000 November, JP Morgan and Rand Financial each bought 300 November. Speculative fund buying was estimated at 2,000 contracts.

 

On the sell side, ABN Amro, Calyon Financial, and Man Financial each sold 500 November, ADM Investor Services and FCStonnee each sold 300 November.

 

South American soybean futures ended lower, with the August future settling 5 1/4 cents lower at US$6.20.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal gaining product share versus soyoil. Soymeal futures ended modestly higher, in step with gains in soybeans. The market did trim advances in unison with the rest of the complex, but the unwinding of soyoil/soymeal spreads enabled futures to hold onto gains down the stretch.

 

Soyoil futures ended lower across the board, falling back from earlier gains. The market followed the supportive tonnee of soybeans for most of the day, but uncovered speculative selling pressure as the energy impact on the market led prices lower with crude oil futures.

 

August oil share ended at 43.76%, and the August crush ended at 75 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses with Bunge Chicago a buyer of 400 December and Rand Financial a seller of 200 December.

 

In soyoil trades, Bunge Chicago bought 500 December, JP Morgan bought 400 December and Rosenthal bought 700 May. Man Financial sold 800 December, Calyon Financial sold 600 August and 600 December, Citigroup sold 800 September, JP Morgan sold 400 December, ADM Investor Services and Rand Financial each sold 300 December. Speculative fund selling was estimated at 3,000 lots.