August 26, 2006
 
CBOT Soy Review on Friday: Lower on technical weakness

 

 

Soy complex futures at the Chicago Board of Trade fell Friday, pressured by speculative selling, favorable crop conditions and technical weakness.

 

Most-active November soybeans settled 8 cents weaker at US$5.57 a bushel. December soyoil settled down 4 points at 25.55 cents a pound. December soymeal fell US$2.80 to US$162 a short tonne.

 

Funds were light net sellers in a day of little buying, floor traders said. Technical-chart related selling hit November soybeans as the market fell to 18-month lows. The contract broke double-bottom support at the US$5.59 1/2 per-bushel level, analysts said. The combination of bearish fundamentals and technical weakness led to the losses.

 

"Since the first of August the weather has been beneficial for soybeans," said Sid Love of Joe Kropf/Sid Love Consulting. "We're at crop conditions that are better than last year and the five-year averge."

 

Moderate temperatures and rainfall through August in most areas of the Midwest are helpful for pod-filling, which can help test weights.

 

Pro Farmer on Friday estimated the 2006-07 U.S. soybean crop at 3.023 billion bushels, with the soy yield at 40.9 bushels per acre.

 

This compares to the U.S. Department of Agriculture's projection of a 2006-07 corn crop of 10.975 billion bushels, based on an average yield of 152.2 bushels/acre, in its Aug. 11 report. The USDA pegged the 2006-07 soybean crop at 2.927 billion bushels, with an average yield of 39.6 bushels/acre.

 

The Pro Farmer 2006-07 corn and soybean estimates released Friday are in no way associated with the John Deere/Pro Farmer Midwest crop tour or its participants. Pro Farmer said tour data was one of the factors taken into account, "but there is not a mutually exclusive correlation between tour data and the Pro Farmer crop estimates."

 

"The 3-billion bushel crop estimate was slightly bigger than what I expected. I was expecting a bean crop of 2.9 and some change," Kropf said.

 

Earlier this week soybeans rose on buying looking down the road at potential acreage reductions for Brazil and India, and Kropf said longer-term he can justify buying soybeans, but given the likelihood of a big crops coming from the pending fall harvest, it's hard to get bullish on soybeans in the near term.

 

In other news, Coast Guard reopens Mississippi River to limited barge traffic after three separate accidents closed part of the river.

 

Soybean buyers include ADM, ABN Amro, Calyon, Goldenberg and RJ O'Brien each buying 200 November. Sellers include Fimat selling 700 November; Man Financial and SA Inc each selling 600 November; O'Connor selling 200 November.

 

 

Soy products

 

Soy products ended weaker, with soyoil falling late in the sesion and soymeal down for much of the day.

 

Commercials were net buyers in soyoil, while funds were light sellers of both products. It was the late break in soybeans and meal that dragged down soyoil into the close.

 

For much of the session, though, mixed trade was the theme Friday in the soy products, with soyoil rebounding after two days of losses and soymeal slipping again. Soyoil rose on borrowed momentum from firm crude oil futures. Even though Thursday's Census Bureau data showed hefty soyoil stocks, speculators continue to buy the contract on its tie to biodiesel.

 

Soymeal fell due to inter-product spreads.

 

In soymeal Fimat bought 600 September; Rosenthal buying 100 December and 200 May. Sellers include FCStonnee selling 200 December.

 

In soyoil ADM buying 200 December; Bunge buying 600 December; Term buying 400 December; Citigroup buying 500 December; Fimat buying 200 January and 300 December. Sellers include FCStonnee selling 300 December; Fimat selling 200 September; and scattered selling.