July 28, 2006

 

CBOT Soy Review on Thursday: Retreats on tech sales, rain chances

 

 

Chicago Board of Trade soybean futures stumbled to 5 1/2-week lows Thursday, retreating on technically inspired selling and improved Midwest rain chances after expected weekend heat.

 

August soybeans ended 7 3/4-cents lower at US$5.74, November soybeans finished 7 3/4-cents lower at US$5.95. December soymeal settled US$2.40 lower at US$170.70 a short tonne, while December soyoil ended 5 points lower at 26.77 cent a pound.

 

The market's declines were technically oriented, with speculative sales pressing the market after active contracts blew through underlying support levels, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The market took out a lot of pre-placed sell stop orders, with new shorts coming onboard to add to the declines, Scoville added.

 

Moderating weather forecasts, with more pronounced rain events on tap for the Midwest after stressful heat moves out of the central U.S. early next week served as an underlying theme to help futures remain firmly planted in negative territory, analysts added.

 

The Midwest will heat up through Monday, with 90 to 100 degree Fahrenheit temperatures expected in the western belt while the eastern belt heats up to the upper 80s and mid 90s, said Mike Palmerino, meteorologist with DTN Meterologix Weather Services.

 

Showers and thunderstorms return to the western Midwest Tuesday, moving into the eastern Midwest by Wednesday bringing 1/4 inch to 3/4 inch rains, Palmerino said. The current forecast now has more shower activity in a 7-day period then prior forecasts, maintaining the summer weather pattern of a couple of days of hot temperatures followed by rains, Palmerino added.

 

The weather forecast is little changed from Wednesday, so it seems the declines were more a function end of the month fund activity taking place as the weather failed to press the corn market, Scoville added.

 

In pit trades, Calyon Financial bought 500 November, ADM Investor Services bought 400 November, ABN Amro, Fimat, RJ O'Brien and Rand Financial each bought 300 November.

 

On the sell side, ABN Amro and Fimat each sold 1,000 November, Man Financial sold 1,500 November, with Calyon Financial and Citigroup active sellers as well. Speculative funds were estimated sellers of between 3,000 and 4,000 contracts.

 

South American soybean futures ended steady, with the August future settling unchanged at US$6.25.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, following soybeans, with technically inspired sales featured. Soymeal futures remained under the influence of soybean direction, satisfying a near term objective of filling a 1-week old chart gap. However, the unwinding of soyoil/soymeal spreads did manage to limit declines, with decent weekly export sales keeping December prices form challenging recent lows, analysts said.

 

Soyoil futures fell to their lowest prices since June 29, stumbling below meaning support levels on technical charts. Weakness in soybeans kick started the declines, with technical pressure and speculative liquidation sustaining the declines, traders said.

 

August oil share ended at 43.91%, and the August crush ended at 75 1/2 cents.

 

In soymeal trades, JP Morgan was an active buyer. Sellers were scattered among various commission houses, with Tenco a seller of 700 December. Speculative fund selling was estimated at 2,000 contracts.

 

In soyoil trades, JP Morgan bought 400 August and 1,200 December, Bunge Chicago bought 600 September, Rand Financial bought 800 December, and Tenco bought 900 December. Tradelink and Rand Financial each sold 1,000 December, Man Financial sold 600 December, and Iowa Grain sold 400 December. Speculative funds were net sellers on the day.