August 9, 2006

 

CBOT Soy Review on Tuesday: Backpedals; weather, technicals press

 

 

Chicago Board of Trade soybean futures ended on the defensive Tuesday, backpedaling on technically motivated speculative sales and bearish weather outlooks for pod-filling Midwest crops.

 

August soybeans ended 5 3/4 cents lower at US$5.57 1/2, and November soybeans finished 5 3/4 cents lower at US$5.76 1/4. December soymeal settled US$1.50 lower at US$163.10 a short tonne, while December soyoil ended 10 points lower at 26.84 cent a pound.

 

The market's ability to penetrate underlying technical support levels attracted speculative selling, with a break in Midwest heat and timely rains providing the fundamental means to keep buyers on the run, said Bill Nelson, associate vice president with A.G. Edwards and Sons in St. Louis.

 

The most-active November contract fell to its lowest level since March 2005.

 

Speculative-led selling served as the driver of the price weakness, with Midwest weather conditions favorable for yield potential and technical pressure keeping a lid on upside moves.

 

The ability of soybeans to break some major technical support provided a spark to accelerate the declines, as the elimination of a weather threat took the legs out from under prices, said a CBOT commission house broker.

 

The weather pattern for the Midwest crop belt seems to be stabilizing, with daily episodes of rain showers scattered across the Midwest coupled with cooler temperatures in the next five days providing good crop conditions, said Mike Palmerino, meteorologist with DTN Meteorlogix Weather Service.

 

The 6-10 day forecast does not present any dramatic change in the weather outlook for the Midwest, but its does present a better chance of more widespread showers toward the weekend, Palmerino added. The western belt would experience showers Saturday and Sunday, with the rain moving to the eastern Midwest Sunday into Monday, Palmerino said.

 

In pit trades, RJ O'Brien and Tenco each bought 1,000 November, and JP Morgan bought 500 November. FCStonnee and Fimat each bought 400 November. Selling was scattered across various commission houses with ADM Investor Services, Fimat, Man Financial, JP Morgan and Rand Financial featured sellers.

 

South American soybean futures ended lower, with the August future settling 6 1/2 cents lower at US$6.07.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, succumbing to the bearish influence of soybean price weakness, analysts said. Soymeal futures dropped to new contract lows, as the absence of fundamental strength kept a defensive tonnee in the market, traders said.

 

Soyoil futures ended a two-sided session lower, peeling back earlier gains on spillover pressure from soybeans and retreat in crude oil futures, analysts said. Futures found early support from higher crude prices, with optimism tied to biodiesel enthusiasm underpinning prices. However, a lack of follow through momentum and subsequent drop in other markets attracted sellers to pin prices in negative territory down the stretch.

 

August oil share ended at 45.19%, and the August crush ended at 76 1/4 cents.

 

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

 

In soyoil trades, Bunge Chicago bought 800 December, and Tenco bought 400 December. Calyon Financial, Iowa Grain and Rosenthal each bought 300 December. Bunge Chicago sold 500 December, Fimat sold 300 December and Rand Financial sold 200 December.