August 16, 2007

 

CBOT Soy Review on Wednesday: Settles lower; premium subtracted again

 

 

Chicago Board of Trade soybean futures ended lower across the board Wednesday, continuing to extract risk premium with technical weakness attracting sales as well, analysts said.

 

September soybeans settled 12 cents lower at US$8.39, and November soybeans finished 11 1/2 cents lower at US$8.54 1/2. September soymeal settled US$5.60 lower at US$227.80 per short tonne, and December soymeal settled US$4.80 lower at US$235.10. September soyoil ended 12 points lower at 35.84 cents a pound, and December soyoil finished 15 points lower at 36.52.

 

Follow through selling from Tuesday's slide below major moving average support levels coupled with beneficial rains moving across 70% of the soybean belt during its critical pod filling stage enticed traders to extract premium from prices, said Chad Henderson, analyst with Prime Ag Consultants in Brookfield, WI.

 

"Rain makes grain, and with improved moisture across a large portion of the Midwest during the first couple of weeks of the crop's key yield developing stage, its tough to mount any bullish charge," Henderson added.

 

Technical weakness played a key role in the declines, with speculative selling driving prices to one week lows, traders said. Solid underlying demand and talk of overdone losses amid a lack of aggressive selling near the lows managed to uncover some buying to limit declines, traders added.

 

Meanwhile, the DTN Meteorlogix weather forecast calls for an additional one inch maximum rain pattern for northern Iowa into Minnesota during the weekend. This moisture pattern is beneficial for late-season stages of soybeans. Northern and eastern Illinois will have showers of up to three-quarters of an inch between Wednesday and Friday, and an additional round of up to three-quarters of an inch during the weekend. This rainfall will benefit crops over the northern half of the eastern Midwest as well, Meteorlogix reports.

 

Southeast U.S. areas of the Midwest through the Delta are suffering from mostly dry and hot conditions which increase stress on filling crops. This sector of the central U.S. has hot and mostly dry weather for the next five to seven days, which will continue to stress filling soybeans. Meanwhile, the track of Tropical Storm Dean is uncertain. The storm appears to be on a course which would track through the Gulf of Mexico during the next 10 days, along with bringing a good chance of rain into the Delta and the southern Midwest, Meteorlogix said.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Analysts predict old-crop soybean sales of 50,000 to 100,000 metric tonnes. New-crop sales are seen in a range of 200,000 to 400,000 metric tonnes. Soymeal sales are seen in the 75,000 to 200,000 metric-tonne range, and soyoil sales are pegged to fall within a range of 15,000 to 40,000 tonnes.

 

In pit trades, MF Global and RJ O'Brien each sold 500 November, Fimat sold 400 November, and ADM Investor Services, Kottke and Rand Financial each sold 300 November. Buyers were lightly scattered among various commission houses. Speculative fund selling was estimated at 5,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board Wednesday. Soymeal futures backpedaled in unison with soybeans, with technical selling playing a key role as active contracts dipped below major moving average support, analysts said.

 

Soyoil futures ended lower as well, unable to escape the defensive tonnee filtering through the complex. Weakness from soybeans and technical selling attributed to prices drifting down to fill seven-week old chart gaps were bearish features, analysts said. Meanwhile, spillover support from higher crude oil prices limited pressure and underpinned prices for most of the day, analysts added.

 

December oil share ended at 44.03% and the September crush ended at 57 cents.

 

In soymeal trades, Fimat bought 700 December, JP Morgan sold 500 December and Fimat sold 400 July. Speculative fund selling was estimated at 1,500 lots.

 

In soyoil trades, Citigroup bought 500 December and 300 July, MF Global sold 300 December, and Fimat sold 400 December. Spec fund selling was estimated at 1,000 lots and commercial buying was estimated at 2,000 contracts.