August 11, 2006

 

CBOT Soy Review on Thursday: Falls to bottom of range ahead of report

 

 

Chicago Board of Trade soybean futures ended a relatively quiet trading session moderately lower, falling to the bottom of the current trading range as traders gear up for Friday's crop report.

 

August soybeans ended 5 cents lower at US$5.57, November soybeans finished 5 3/4 cents lower at US$5.74 1/4. December soymeal settled US$0.70 lower at US$162.70 a short tonne, while December soyoil ended 38 points lower at 26.80 cent a pound.

 

The market saw a bit of action on the close, but otherwise activity was extremely light throughout with very little trading in the spreads, while weather continued to allow market bears to put pressure on prices, said Nick Leblebijian, chief executive of Lakefront Futures & Options, LLC.

 

The market showed an unwillingness on the part of traders to take on added risk heading into Friday's reports, as the U.S. Department of Agriculture's first survey-based yield and production estimates are expected to shape direction in the near term, a CBOT commission house broker added.

 

Oversold market conditions and higher-than-expected weekly export sales provided mild support, but not enough to offset the defensive nature attributed to bearish underlying fundamental outlooks, traders added.

 

Meanwhile, the DTN Meteorlogix forecast calls for episodes of scattered showers and thunderstorms in the Midwest, stabilizing and improving crop conditions for filling corn and soybeans. The greatest amount of this storm activity will be in the western Midwest (west of the Mississippi River). In the eastern Midwest, near to above normal temperatures and near to below normal rainfall during the next seven days will generally favor filling corn and soybeans except in a few dry spots over western Illinois, Meteorlogix forecasts.

 

On tap for Friday, USDA is scheduled to release its crop production, supply and demand reports at 7:30 a.m. CDT. The average of trade estimates pegs 2006 soybean production at 3.020 billion bushels from a range of estimates that span from 2.909 billion to 3.105 billion. The average of yield estimates was 40.8 bushels per acre from a range of 39.3 to 42.0 bushels per acre. USDA is scheduled to release its August crop report Friday 7:30 a.m. CDT.

 

In pit trades, JP Morgan bought 600 November, Calyon Financial and Tenco each bought 500 November, Man Financial bought 400 November, with Iowa Grain and RJ O'Brien each buying 300 November.

 

Sellers were scattered among various commission houses.

 

South American soybean futures ended lower, with the August future settling 4 cents lower at US$6.08.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, setting back in unison with soybeans. Soymeal futures ended a two-sided session on the defensive, stumbling to session lows down the stretch, instep with the late declines in soybeans. Light soyoil/someal spread unwinding provided support for most of the day, but with soybeans falling and a lack of supportive news futures easily drifted lower, traders said.

 

Soyoil futures stumbled lower Thursday, pressured by technically motivated sales and pre-report positioning. Weakness in crude oil futures took a toll on the market, as the energy component related to biodiesel continues to keep futures trading in unison with energy products. Technical pressure extended the declines, with declines accelerating once the December contract fell below its 50-day moving average down the stretch, traders said.

 

August oil share ended at 45.25%, and the August crush ended at 77 1/2 cents.

 

In soymeal trades, Bunge Chicago bought 800 December, FCStonnee and Iowa Grain each bought 500 December. Sellers were scattered among various firms.

 

In soyoil trades, Fimat bought 500 December, and ADM Investor Services and Citigroup each bought 300 September. FCStonnee sold 700 December, Calyon Financial sold 400 December, RJ O'Brien and Tenco each sold 300 December.