August 29, 2006

 

CBOT Soy Review on Monday: Sets new move lows; bearish crop outlooks

 

 

Chicago Board of Trade soybean futures ended Monday's session posting moderate declines, carving out new lows for the current move as bearish crop outlooks continue to press prices.

 

September soybeans ended 5 1/4 cents lower at US$5.37 3/4, and November soybeans finished 5 cents lower at US$5.52. December soymeal settled US$0.30 lower at US$161.70 a short tonne, while December soyoil ended 38 points lower at 25.17 cents a pound.

 

Favorable weather conditions for pod-filling soybean crops across the Midwest set the stage for the declines, with technical weakness adding pressure to keep prices firmly planted in negative territory, analysts said.

 

The theme was consistent from the outset, with futures extending the overnight theme as downside movement seems unabated in the absence of fresh supportive features to underpin prices, traders added.

 

It's the same old story, bearish crop conditions promote higher crop outlooks, and with abundant domestic and world inventories, downside movement remains the path of least resistance, said a CBOT commission house broker. It may be old news, but you can't find willing buyers to step in the face of bearish fundamentals, even with oversold conditions, he added.

 

Meanwhile, the DTN Meteorlogix forecast said a low pressure system is bringing rain and cool weather to the Midwest. Showers may linger near the Ohio River on Tuesday, with mainly dry conditions elsewhere in the region. Mainly dry conditions are on tap for Wednesday, with temperatures averaging near to mostly below normal Tuesday, and near to above normal Wednesday.

 

Scattered showers and thundershowers are forecast to redevelop through the western Midwest Friday or Friday night. Temperatures will average near to above normal, Meteorlogix forecasts.

 

In pit trades, Fimat and JP Morgan each bought 500 November, and Shatkin/Arbor bought 400 November. On the sell side, JP Morgan sold 1,000 November, Calyon Financial and Tenco each sold 300 November.

 

Monday after the close, the U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 3 p.m. CDT. Analysts anticipate good-to-excellent crop ratings to come in 1 to 2 percentage points higher based on favorable weather conditions for crops in the past week.

 

South American soybean futures ended lower, with the September futures settling 5 1/2 cents lower at US$5.97.

 

 

SOY PRODUCTS

 

Soy product futures ended lower Monday. Soymeal futures saw modest declines, stumbling lower on sympathetic selling with declines in soybeans. Soyoil/soymeal spread unwinding managed to provide mild support to limit the day's losses.

 

Soyoil futures fell, with most active December dropping to a two-month low. Speculative-led selling was a featured attraction, with weakness in crude oil futures managing to take some wind out of bullish sails tied to biodiesel enthusiasm, analysts said.

 

September oil share ended at 43.57%, and the September crush ended at 81 3/4 cents.

 

In soymeal trades, Shatkin Arbor bought 500 December, ABN Amro bought 300 December and FCStonnee bought 200 December. Sellers were scattered among various commission houses.

 

In soyoil trades, Fimat and Bunge Chicago each bought 300 December. Bunge Chicago and Fimat each sold 500 December, Man Financial and Fortis each sold 400 December, and ABN Amro and JP Morgan each sold 300 December.

 

Speculative fund selling was estimated at 2,000 lots.