August 17, 2006

 

CBOT Soy Review on Wednesday: Sinks to bottom of trading range

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, sinking to the bottom of the market's recent trading range, as bearish fundamental outlooks keep buyers on the sidelines.

 

September soybeans ended 4 1/4 cents lower at US$5.52 1/4, and November soybeans finished 4 1/4 cents lower at US$5.65. December soymeal settled US$1.40 lower at US$162.70 a short tonnene, while December soyoil ended 19 points lower at 25.73 cent a pound.

 

It's a key time for the U.S. soybean crop, and with friendly Midwest weather outlooks, bearish price action remains a dominant feature, said Bill Nelson, associate vice president at A.G. Edwards and Sons in St. Louis.

 

Futures initially pushed higher, bolstered by strength in the cash basis, as buyers continue to clamor for supplies in the absence of farmer selling, analysts said. However, the market's inability to attract follow-through momentum allowed sellers to trump buying interest, as bearish crop outlooks and nearby supplies proved to be a tough foe for bullish traders to overcome, said a CBOT commission house broker.

 

Bearish momentum is firmly intertwined in the market, and even strong cash prices, and demand prospects can't provide enough support to generate sustainable upward strength, he added.

 

The market feel is very heavy at this point, and unless we can produce a strong close it would be difficult to justify taking a long position, as pristine weather conditions aren't going to help this market rally, said Jon Marcus, president-CFO Lakefront Futures & Options, L.L.C.

 

Meanwhile, the DTN Meteorlogix forecast calls for rain showers to shift into the Midwest Thursday and Friday, where up to 1 1/2 inches of rain is in store for Friday into Saturday. The heaviest rain will fall in Iowa, Missouri and the eastern Midwest (east of the Mississippi River).

 

In pit trades, buyers were scattered among various commission houses, with Calyon Financial and Rand Financial each buyers of 300 November.

 

On the sell side, Calyon Financial sold 1,100 November and Man Financial sold 700 November, with ADM Investor Services, ABN Amro and Goldenberg Hehmeyer each sellers of 300 November. Speculative fund selling was estimated between 1,000 and 2,000 contracts.

 

South American soybean futures ended lower, with the September future settling 8 cents lower at US$6.02.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board Wednesday, in unison with the defensive tonnenee in soybeans. Soymeal futures carved out modest declines over the course of the day, with weakness in soybeans the key driver of the price declines. Meanwhile, inter-product spreading did allow meal to gain some product share on the day, analysts said.

 

Soyoil futures stumbled lower, sympathetically weak with declines in crude oil futures, said Nelson. The spread basis, with the unwinding of soyoil/soymeal spreads, added to the losses with waning speculative interest tied to biodiesel enthusiasm taking some edge off prices, analysts added.

 

September oil share ended at 44.13%, and the September crush ended at 74 3/4 cents.

 

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

 

In soyoil trades, JP Morgan bought 400 December and Fimat bought 300 December. Sellers were scattered among various commission houses with RJ O'Brien a seller of 300 December.