August 11, 2007

 

CBOT Soy Review on Friday: End down amid outside market weakness, weather

 

 

Chicago Board of Trade soybean futures ended lower Friday, pulling back from earlier highs on the influence of weakness from outside markets, and improved weather outlooks for next week.

 

August soybeans settled 8 cents lower at US$8.50, and November soybeans finished 6 cents lower at US$8.71 3/4. August soymeal settled US$0.20 higher at US$232.50 per short tonne. August soyoil ended 60 points lower at 36.28 cents a pound.

 

Private weather forecasts increasing rain potential through the central U.S. next week produced a cautious atmosphere in the market, with traders unwilling to take on added risk heading into the weekend, analysts said.

 

Speculative profit-taking after the market's recent climb served as a catalyst for the declines, with jitters associated with continued weakness in global equity markets enticing traders into booking some profits, said Joe Victor, analyst with Allendale Inc. in McHenry, Ill.

 

The U.S. Department of Agriculture's production report was a non-event, with new crop ending stock estimates supportive but largely expected in the marketplace, analysts added.

 

Nevertheless, futures remain firmly underpinned amid tightening new crop inventories and uncertainties about new crop yields and production, Victor added. The DTN Meteorlogix Weather forecast calls for generally hot and dry weather in the central U.S. through the weekend. The hottest temperatures will be in the western Midwest, central and southern Plains, central Texas and the Mississippi Delta, with readings of over 100 degrees Fahrenheit. Highs in the mid-90s will also cover the mid-Mississippi Valley through the Ohio Valley.

 

During the six- to 10-day period ending Aug. 20, a more favorable temperature trend is featured. Upper-atmosphere high pressure will remain over the southwest Plains and southern Rockies during this period. This upper-level high will keep mostly dry weather in place over the Midwest except for some showers in Minnesota and the Dakotas. In addition, upper-atmosphere low pressure will form over the Great Lakes during the middle of next week. This will bring in more northwesterly winds and will allow for a break in the Midwest heat wave, Meteorlogix forecasts.

 

In pit trades, Tenco bought 1,000 November, RJ O'Brien bought 500 November, UBS Securities bought 500 September, Fimat bought 400 November and ADM Investor Services and Man Financial each bought 300 November. Fimat, Fortis and UBS Securities each sold 1,000 November, JP Morgan, Penson GHCO and RJ O'Brien each sold 500 November, with ADM Investor Services and Man Financial each sellers of 400 November. Speculative funds were estimated sellers of between 5,000 and 6,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mostly lower, with soyoil leading the downside push. Soyoil futures were pressured by spillover from soybeans, weakness in crude oil futures, technical pressures and an upward revision in the USDA's old and new crop ending stock projections, analysts said. Technical selling was featured, with declines accelerating once sell-stop orders were activated after futures drifted below major moving average support, analysts added.

 

Soymeal futures ended mixed to lower, succumbing to spillover weakness from soybeans. However, the market continued to gain product share, with underlying demand and the ability of futures to hold major moving average support levels keeping a floor beneath prices, analysts added.

 

August oil share ended at 43.83%, and the August crush ended at 60 1/2 cents.

 

In soymeal trades, Bunge Chicago sold 400 December, Tenco sold 800 December, Fimat sold 600 December, and Prudential Financial sold 300 September. Speculative fund selling was estimated at 2,000 lots.

 

In soyoil trades, ADM Investor Services bought 800 September, and Citigroup and Prudential Financial each bought 300 December. Fimat sold 700 December, UBS Securities sold 1,000 December, Rand Financial sold 500 December, RJ O'Brien sold 400 December and JP Morgan sold 300 December. Speculative fund selling was estimated at 3,000 lots.