August 18, 2006

 

CBOT Soy Review on Thursday: Grind lower; crop conditions trump demand

 

 

Chicago Board of Trade soybean futures ended marginally lower Thursday, continuing its daily grind lower as yield-enhancing Midwest weather trumps underlying demand.

 

September soybeans ended 3/4-cent lower at US$5.51 1/2, November soybeans finished 1/2-cent lower at US$5.64 1/2. December soymeal settled US$1.00 higher at US$163.70 a short tonne, while December soyoil ended 29 points lower at 25.44 cent a pound.

 

Good moisture and mild temperatures during soybean's critical growth period has the market anticipating bigger yields and production, and that is enough to overshadow a pickup in export demand, said Brian Hoops, president Midwest Market Solutions.

 

The most active November futures backpedaled to an 18-month low, before the combination of scale-down buying and exhausted selling pressure allowed futures to trim losses down the stretch, traders said.

 

A higher-than-expected weekly export sales figure, firm cash prices combined with oversold market conditions, provided the means for upward movement. However, the inability of futures to attract aggressive buyers in the face of rising production outlooks, rekindled bearish momentum to extend the markets price weakness.

 

The theme remained consistent, with sellers waiting to pounce of rallies in the face of bearish U.S. and world supplies, analysts said.

 

Meanwhile, the DTN Meteorlogix forecast calls for current showers in Iowa and southern Minnesota to continue to develop across the remainder of the Midwest through the remainder of the week. The rainfall will range from one-half to one and one-half inch with these storms. The precipitation that has occurred has benefited late-season crop development, with soybean yield potential notably increased, due to the soybean reproduction and pod-fill stages occurring during August, Meteorlogix reports.

 

In pit trades, buyers and sellers were scattered among various commission houses, with ABN Amro a buyer of 600 November and Man Financial a seller of 800 November.

 

South American soybean futures ended higher, with the September future settling 10 cents higher at US$6.12.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed once again, with inter-product spreading creating the divergence in price direction, analysts said. Soymeal futures benefited from soyoil weakness, with larger-than-expected weekly export sales data helping the market gain some product share.

 

Soyoil futures fell to 7-week lows, extending its corrective move from prior gains, as weakness in crude oil futures continued to erode some biodiesel enthusiasm from the market, analysts said. The most-active December future stumbled to its lowest level since June 26 in relatively quiet action.

 

September oil share ended at 43.64%, and the September crush ended at 75 cents.

 

In soymeal trades, buyers and seller were scattered across various commission houses.

 

In soyoil trades, Prudential Financial bought 600 October, Bunge Chicago bought 400 December, and Fimat bought 300 December. Tenco sold 1,200 December, Rand Financial sold 600 December, with Fimat and Man Financial each selling 300 December. Speculative fund selling was estimated between 2,000 and 3,000 lots.