August 29, 2007
 
CBOT Soy Review on Tuesday: Drifts lower as buying exhausts at highs

 

 

Chicago Board of Trade soybean futures ended Tuesday's session posting modest declines, easing back from initial gains amid the exhaustion of upside momentum at session highs.

 

September soybeans settled 1 1/4 cent lower at US$8.55 1/4, and November soybeans finished 1/2 cent lower at US$8.72 1/4. September soymeal settled US$1.10 lower at US$234.80 per short tonne, and December soymeal settled US$0.70 lower at US$242.00. September soyoil ended 13 points lower at 36.05 cents a pound, and December soyoil finished 7 points lower at 36.82.

 

Buyers showed reluctance to extend early price strength, as traders became cautious of pushing prices in the face improved crop ratings, less threatening weather and talk of the potential for larger production outlooks, said John Kleist of Kleist Ag Consulting.

 

The market initially climbed to 2-week highs on carryover technical buying, but with buying interest exhausted at session highs, profit taking quickly surfaced to press prices, analysts said. Overall activity was light, with futures settling into a range while prices continued to hold major moving average support, analysts added.

 

Fundamentally, crop conditions have improved this week and without any fresh inputs to direct prices, traders were seemingly content to watch technical charts for near term direction, traders said.

 

The indecision at higher levels could be traced to unexpected crop ratings improvements, as this gave credence to larger private production estimates, said Kleist.

 

The market's psychology wants to be bullish, but the reasons for bullishness seem to be diminishing, Kleist added.

 

Crop weather looks to be favorable through the 10-day period ending Friday, Sept. 7. The DTN Meteorlogix forecast calls for rain of up to one and one-half inches during the next three days in the western and northern Midwest, with only light showers in the eastern and southern Midwest through the Delta.

 

Consistent with the last four weeks, the most difficult crop weather will be in the Delta, where heat and drought have hurt yield prospects. The first week of September will bring mostly dry conditions to the entire central U.S., with temperatures ranging mostly above normal. This trend puts daytime highs in the middle to upper 80s to low 90s Fahrenheit, Meteorlogix forecasts.

 

In pit trades, ADM Investor Services, Fimat, Rand Financial and UBS Securities each bought 300 November. UBS Securities sold 600 November, Tenco and MF Global each sold 300 November with additional selling widely scattered among various commission houses. Speculative funds were estimated net sellers on the day.

 

 

SOY PRODUCTS

 

Soy product futures ended mostly lower, easing back in unison with declines in soybeans. Soyoil futures backpedaled, with its recent rally running out of steam in the absence of fresh supportive features, analysts said. Neither product showed any leadership Tuesday, with soyoil looking a little tired at recent highs, said John Kleist.

 

Soymeal futures drifted lower in unison with soybeans, consolidating while holding firmly above major moving average support, analysts said.

 

December oil share ended at 43.21% and the September crush ended at 57 3/4 cents.

 

In soymeal trades, Tenco bought 400 October, and UBS Securities bought 300 December. Sellers were lightly scattered among various commission houses.

 

In soyoil trades, MF Global bought 300 December, with other buyers and sellers scattered among various firms. Speculative fund selling was estimated at 1,000 lots.