July 27, 2006

 

CBOT Soy Review on Wednesday: Backpedals; rains trump weekend heat

 

 

Chicago Board of Trade soybean futures ended lower across the board Wednesday, settling down after a choppy session, as speculative sales emerged amid beneficial rains moving across the Midwest.

 

August soybeans ended 3 1/2-cents lower at US$5.81 3/4, November soybeans finished 4 1/4-cents lower at US$6.02 3/4. December soymeal settled US$0.70 lower at US$173.10 a short tonne, while December soyoil ended 28 points lower at 26.82 cent a pound.

 

The markets mood shifted to immediate forecasts with rains currently circulating across the crop belt, as traders shied away from conflicting longer term weather outlooks, said John Kleist of Kleist Ag Consulting.

 

A continuing debate over when a heat ridge hovering in the Midwest will break up, remains an underpinning force in the market, but with ample supplies and better-than-expected rains in parts of the belt, upside momentum was capped, traders added.

 

Overall activity was subdued, with futures hovering in volatile sideways trade, as the market remains cautious of pushing or pressing prices until a better handle on the size of the 2006 crop is established, analysts said.

 

Futures remains subjected to range bound action, with active November futures finding support near the US$6.00 per bushel level, while the nearby August contract can't find enough momentum to rise up and challenge resistance at the US$6.00 level, analysts added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast calls for rainfall to continue across the eastern Midwest through early Friday, with the heaviest rains in south-central Illinois through the Ohio Valley. The rains will be important to mitigate crop stress, because temperatures will reach the mid-90s Fahrenheit during the first part of next week, the forecast said.

 

In the western Midwest, there will be very little change in the pattern of much-above normal temperatures and below normal precipitation. Western Midwest areas will have temperatures in the general range of 92-99F through the weekend, Meteorlogix forecasts.

 

Ahead of Thursday's U.S. Department of Agriculture weekly export sales report, analysts forecast soybean commitments in a range of 150,000 to 400,000 metric tonnes. Soymeal sales are seen falling in a range of 50,000 to 150,000 metric tonnes and soyoil commitments are expected in a range of zero to 6,000 tonnes.

 

In pit trades, ADM Investor Services bought 1,000 November, and JP Morgan bought 2,000 November. ADM Investor Services and UBS Securities each sold 1,000 November, Man Financial sold 1,500 November and FCStonnee sold 400 November.

 

South American soybean futures ended higher, with the August future settling 5 cents higher at US$6.25.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, with soymeal gaining some product share at the expense of weakness in soyoil. Soymeal experienced a choppy session, supported most of the day from soyoil/soymeal spread unwinding, before spillover pressure from soybeans emerged to weigh on prices, analysts said.

 

Soyoil futures settled lower, backpedaling on speculative long liquidation. The absence of fresh news and a choppy tonnee in the crude oil futures market promoted a defensive tonnee to attract speculative sales, traders said.

 

August oil share ended at 43.73%, and the August crush ended at 74 1/4 cents.

 

In soymeal trades, Goldenberg Hehmeyer bought 1,800 December, and Man Financial bought 1,600 December. Bunge Chicago sold 400 September and 300 December, Calyon Financial sold 500 December. Speculative funds were estimated buyers of 4,000 lots.

 

In soyoil trades, Tenco bought 600 December, Man Financial bought 300 December, and JP Morgan bought 400 August. Bunge Chicago sold 400 September, and Man Financial sold 300 December.