August 8, 2006

 

CBOT Soy Review on Monday: Multi-mo lows; weather, tech sales cited

 

 

Chicago Board of Trade soybean futures ended sharply lower Monday, stumbling to multi-month lows on improved weather conditions for pod-filling crops and technical weakness.

 

August soybeans ended 14 1/4 cents lower at US$5.63 1/4, and November soybeans finished 15 cents lower at US$5.82. December soymeal settled US$4.60 lower at US$164.60 a short tonne, while December soyoil ended 27 points lower at 26.94 cent a pound.

 

The theme was consistent from the outset, with futures gapping below near- term support on technical charts, as less threatening crop conditions attracted speculative selling to pin prices in negative territory, analysts said.

 

The most-active November futures dropped to an eight-month low, while nearby August and September futures stumbled to contract lows.

 

"Soybeans are a crop of August, and with favorable near-term conditions on tap for the crop, traders and analysts remain respectful of the potential for beans to add to yields if seasonal temperatures and beneficial rains emerge during its critical pod-filling stage in August," a CBOT floor analyst said.

 

Meanwhile, the DTN Meteorlogix forecast calls for periodic thundershowers to produce total rainfall of up to one inch for the week across all but the far-western Midwest. These rains will include coverage in the driest areas of west-central Illinois, and will be beneficial pod development in soybeans.

 

A return to above-normal temperatures and below-normal rainfall is expected during the next week to 10 days - increasing the chances for some heat wave conditions to linger in the entire region going into the latter part of August, Meteorlogix reports.

 

Monday afternoon 3 p.m. CDT, U.S. Department of Agriculture is scheduled to release its weekly crop progress report. Analysts say top rated crops in the eastern Midwest should show improvements from the prior week while crops in the western Midwest may have continued to deteriorate. Floor analysts expect the soybean good-to-excellent ratings to fall within a range from down 2 percentage points to up 3 percentage points.

 

In pit trades, JP Morgan bought 1,000 November, ABN Amro bought 600 November and Fimat bought 800 November.

 

On the sell side, ADM Investor Services and Iowa Grain each sold 1,000 November. RJ O'Brien and Rand Financial each sold 2,500 November, with Man Financial a seller of 2,000 November. Calyon Financial sold 1,200 November, and Fimat sold 1,000 September. Speculative fund selling was estimated near 11,000 contracts.

 

South American soybean futures ended lower, with the August future settling 14-cent lower at US$6.13 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, peeling back in unison with declines in soybeans. Soymeal futures stumbled to new contract lows, under pressure from speculative selling. The absence of fresh news coupled with ample nearby supplies added to the defensive tonnee, analysts said.

 

Soyoil futures fell to over one-week lows, in tune with the bearish tonnee filtering through the soycomplex. Light long liquidation pressure amid the heavy build up of speculative longs in the market served as drivers that aided the defensive tonnee, analysts said. However, rising crude oil futures provided underlying support to limit declines, as the market continues to receive bullish enthusiasm amid the potential for future biodiesel demand, analysts added.

 

August oil share ended at 45.15%, and the August crush ended at 74 cents.

 

In soymeal trades, Buyers were scattered among various commission houses. Prudential Financial and RJ O'Brien each sold 1,000 December. Man Financial, JP Morgan and Fortis each sold 400 December. Speculative fund selling was estimated near 4,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses.