August 1, 2006
CBOT Soy Review on Monday: Ends up after choppy, two-sided session
Chicago Board of Trade soybean futures ended a choppy two-sided session modestly higher Monday, as the market struggled to find direction amid the uncertainty of weather and its impact on yield potential, traders said.
August soybeans ended 3 cents higher at US$5.79 1/2, and November soybeans finished 1 3/4 cents higher at US$5.99 3/4. December soymeal settled US$0.40 lower at US$169.00 a short tonne, while December soyoil ended 23 points higher at 27.54 cents a pound.
Hot, stressful conditions in the Midwest provided underlying support to prices throughout the day, while forecasts calling for a cool down in temperatures and scattered rains at midweek applied pressure to promote a mixed tonnee, analysts said.
With soybeans moving into their critical reproductive stage, weather remains the dominant influence on prices, and traders debated what degree of relief cooler temperatures will bring to crops as well as the potential for heat to return to the region, said a CBOT commission house broker.
Weakness resulting from the market's inability to push higher last week in the face of triple-digit temperatures in the western Midwest stripped bullish confidence from the market, said Mike Zuzolo, chief analyst with Risk Management Commodities Inc. in Lafayette, Ind.
Technical weakness, abundant nearby supplies, the failure of soymeal to find a bottom and traders making preparation for Tuesday's start of side-by-side agriculture trade kept activity subdued and helped stimulate a choppy atmosphere, Zuzolo added.
Meanwhile, a cold front moving into the Midwest will drop temperatures in the northern Midwest to the mid 80 degrees Fahrenheit, as well as produce rainfall from 1/4 inch to 1 inch along a line from Interstate 80 north from Des Moines, Iowa, across the Quad Cities to Toledo, Ohio, Tuesday into Wednesday, said Mike Palmerino, meteorologist with DTN Meteorlogix Weather Services. Coverage will be 60% to 65%, he added.
South of I-80 down to I-70 from St. Louis to Daytonne, Ohio, will receive rains of 1/10 of an inch to 1/2 inch, with 50% coverage, Palmerino said. Temperatures in this region will be quite a bit warmer, averaging from the mid 80s to mid 90s, he added. The uncertainty in the weather comes at the end of the week, as a ridge has potential to return and produce readings in the mid 80s to low 90s for the weekend in the northern Midwest, Palmerino said.
In pit trades, ABN Amro bought 700 November, Fimat bought 600 November, Shatkin/Arbor bought 500 November, and JP Morgan bought 400 November.
Tenco sold 1,500 November, ABN Amro and UBS Securities each sold 500 November, DT Trading sold 400 November.
South American soybean futures ended higher, with the August futures settling 3 cents higher at US$6.29 1/2.
SOY PRODUCTS
Soy product futures ended mixed, with soymeal continuing to lose product share to soyoil. Soymeal futures ended modestly lower, with the active December futures stumbling to a new contract low. The market was pressured by soyoil/soymeal spreading, larger-than-expected deliveries and a lack of supportive fundamental forces in the market.
Soyoil futures ended higher, benefiting from speculative buying attributed to the potential for future demand for soyoil in biodiesel production and the absence of deliveries posted against the August contract on first notice day.
August oil share ended at 45.10%, and the August crush ended at 72 1/4 cents.
In soymeal trades, Bunge Chicago bought 500 December, RJ O'Brien bought 600 July, and JP Morgan bought 400 December. Sellers were scattered among various commission houses, with Fimat a seller of 800 December. Speculative funds were estimated sellers of 1,500 contracts.
In soyoil trades, Tenco bought 2,000 December, Bunge Chicago bought 700 December, FCStonnee bought 600 December. Bunge Chicago sold 500 December, Citigroup bought 400 December and JP Morgan each sold 400 December. Commodity funds were estimated buyers of 3,000 lots.
