August 2, 2007

 

CBOT Soy Review on Wednesday: Retreats on improved weather, technical pressure

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, retracing Tuesday's gains on improved weather outlooks and technical pressure.

 

August soybeans settled 8 1/4 cents lower at US$8.25 3/4, and November soybeans finished 8 3/4 cents lower at US$8.48 3/4. August soymeal settled US$0.30 lower at US$215.30 a short tonne. August soyoil ended 47 points lower at 37.29 cents a pound.

 

The market trimmed some risk premium, as private weather forecasts calling for a little wetter weather for dry areas of Minnesota and the northwest Midwest enticed traders into shedding a little length, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

Wednesday's price action was mostly weather-related, but technical selling applied pressure, with weakness developing once futures failed to attract follow-through buying after breaching resistance at the November contract's 50-day moving average, analysts said.

 

Light spillover pressure from soyoil price declines added to the defensive tonnee, traders added. Nevertheless, futures continue to stay in a relatively sideways trading pattern, unable to generate aggressive momentum in either direction until more is known on U.S. yields, analysts said.

 

The DTN Meteorlogix forecast said the Midwest is forecast to have temperatures in the upper 80s to mid 90s Fahrenheit and little rainfall for the next week. Those conditions will deplete soil moisture, and be stressful to filling corn and soybeans. A few scattered showers this weekend and early next week will mostly be in northern areas, from the eastern Dakotas to the Great Lakes.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Analysts predict soybean sales of 50,000 to 600,000 metric tonnes. Soymeal sales are seen in the 25,000- to 150,000-metric-tonne range, and soyoil sales are pegged to fall within a range of zero to 20,000 tonnes.

 

In pit trades, JP Morgan bought 300 November, and Fimat bought 2,500 November. Tenco sold 500 November, with additional sellers lightly scattered among various commission houses. Speculative fund selling was estimated at 1,500 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mostly lower, with soyoil futures leading the downward slide. Soyoil futures were under pressure from speculative and technical selling, as weakness in world vegoils and crude oil futures set the stage for the defensive theme, analysts said.

 

Soymeal futures ended slightly lower, succumbing to the bearish influence of soybeans and soyoil. Soymeal was the strongest link in the soy complex, finding support from the unwinding of oil/meal spreads, traders said. Otherwise, a quiet news front kept activity light, with the market more of a follower, analysts added.

 

August oil share ended at 46.41% and the August crush ended at 58 cents.

 

In soymeal trades, buyers and sellers were lightly scattered among various commission houses, with ADM Investor Services a buyer of 400 December.

 

In soyoil trades, JP Morgan, Fimat and Rand Financial each bought 500 December. ADM Investor Services and Iowa Grain each sold 400 December, Rand Financial and Fortis each sold 300 December. Speculative fund selling was estimated at 3,500 contracts.