August 19, 2006

 

CBOT Soy Review on Friday: Extends down trend; bearish crop prospects

 

 

Chicago Board of Trade soybean futures ended lower Friday, extending their downward trend, as bearish crop conditions and abundant world inventories continued to apply defensive pressure to prices.

 

September soybeans ended 4 1/2 cents lower at US$5.47, and November soybeans finished 4 cents lower at US$5.60 1/2. For the week, September soybeans were down 8 1/4 cents, and November soybeans dropped 7 3/4 cents.

 

December soymeal settled US$1.60 lower at US$162.10 a short tonne, while December soyoil ended 1 point higher at 25.45 cent a pound.

 

Favorable weather conditions for filling soybeans remain the dominant influence on prices, as rising yield and production forecasts keep futures carving out new swing lows, analysts say.

 

The most active November future stumbled to a new 18-month low, with the nearby September future carving out a new contract low.

 

It's the same old story: Bearish crop conditions are promoting higher crop outlooks, but adding to the mix is overnight news of China raising interest rates, weakness in outside inflationary markets for most of the day and weaker cash basis levels, analysts added.

 

The market managed to satisfy near-term downside objectives, but oversold conditions and rumors of China securing cargoes of U.S. soybeans this week provided light support to limit declines, traders added.

 

Meanwhile, the DTN Meteorlogix forecast calls for Midwest rainfall ranging up to 1 1/2 inches, with isolated heavier amounts during the next three days. This moisture is on the heels of some locally heavy rainfall already this week in the western Midwest (west of the Mississippi River. The rains will provide more moisture for late-season development of soybeans, Meteorlogix reports.

 

In pit trades, speculative fund selling was estimated between 2,000 and 3,000 lots. Man Financial sold 1,200 November and JP Morgan sold 800 November, with Tenco a seller of 300 September. Man Financial was a buyer of 600 November.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspection 10 a.m. CDT and weekly crop progress report 3 p.m. CDT. Analysts anticipate good-to-excellent crop ratings to come in steady to up 2 percentage points follow favorable weather this week.

 

South American soybean futures ended lower, with the September future settling 5 cents lower at US$6.07.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed Friday. Soymeal futures stumbled lower, sustaining a lower tonnee in quiet sideways trade, moving in unison with losses in soybeans.

 

Soyoil futures ended a two-sided session modestly higher. A rebound from recent declines in crude oil futures provided support for prices, as the impact of biodiesel on soyoil continues to keep an energy influence in the market, analysts said. Spillover pressure from soybeans and general selling pressure in other ag commodities applied limited weakness to prices, before late trade positioning emerged to lift futures down the stretch, traders said.

 

September oil share ended at 43.89%, and the September crush ended at 77 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses. Man Financial and Iowa Grain were each sellers of 300 December, with speculative fund selling estimated at 1,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses. RJ O'Brien was a featured seller of 1,200 December.