August 4, 2006

 

CBOT Soy Review on Thursday: Backpedals on weather, crop estimates

 

 

Chicago Board of Trade soybean futures ended lower Thursday, backpedaling from Wednesday's rally amid bearish private crop estimates and favorable near-term weather conditions.

 

August soybeans ended 5 3/4 cents lower at US$5.76, and November soybeans finished 5 3/4 cents lower at US$5.95 1/2. December soymeal settled US$0.50 lower at US$168.10 a short tonne, while December soyoil ended 29 points lower at 27.34 cent a pound.

 

The cooldown in Midwest temperatures coupled with scattered showers moving across the central U.S. promoted a defensive theme, with a higher-than-expected private crop estimate attracting sellers to firmly plant prices in negative territory, analysts said.

 

The market continues to flirt with the bottom end of a six-month trading range, unable to break out from the current pricing pattern, as traders remain on guard until a clearer picture of production and yields can be established, analysts added.

 

Meanwhile, weather forecasts calling for a return of above-normal-temperatures and below-normal-rains next week managed keep a floor under prices, while an absence of significant buying interest failed to wrestle prices from the day's defensive grip, said a CBOT commission house broker.

 

Wednesday afternoon, FC Stonnee released its Aug. 1 U.S. production estimates. The firm forecast the 2006-07 soybean crop at 3.056 billion bushels with a yield of 41.3 bushels an acre. The market rallied Wednesday on rumors the firm would project a yield of 40.5. In the July supply and demand report, the U.S. Department of Agriculture estimated U.S. soybean production at 3.010 billion bushels and a trend line yield of 40.7 bushels per acre. Informa Economics is expected to release its crop projections Friday morning.

 

Meanwhile, DTN Meteorlogix Weather Service said hot weather will rebuild in the Midwest heading into next week, promoting another round of above normal temperatures and below-normal rainfall. This return of the heat wave during the next 7-10 days has the potential to deplete soil moisture and again increase stress on filling corn and soybeans, Meteorlogix reported.

 

In pit trades, Man Financial sold 1,000 November and 500 September, and Calyon Financial and UBS Securities each sold 300 November. Speculative fund selling was estimated at 2,500 contracts. ABN Amro purchased 500 November, and FCStonnee and JP Morgan each bought 200 November.

 

South American soybean futures ended lower, with the August future settling 6-cent lower at US$6.26.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board. Soymeal drifted lower Thursday, setting back in unison with soybeans. The market managed to gain product share at the expense of weakness in soyoil, which helped futures hover above contract lows, analysts say.

 

Soyoil futures backpedaled Thursday, pressured by speculative profit taking, with spillover pressure from the energy sector weighing on the market. The energy component of the market amid soyoil use for biodiesel continues to keep futures monitoring movements in crude oil, analysts added.

 

August oil share ended at 44.98%, and the August crush ended at 73 1/4 cents.

 

In soymeal trades, Fimat bought 400 September, with JP Morgan a seller of 400 December.

 

In soyoil trades, Fimat bought 800 December and Tenco bought 500 December. JP Morgan sold 600 December, Rand Financial sold 500 December, and Man Financial and Merrill Lynch sold 200 December. Speculative fund selling was pegged at 2,000 lots.