September 6, 2007

 

CBOT Soy Review on Wednesday: Slips on profit-taking, corn pressure

 

 

Chicago Board of Trade soybean futures slipped Wednesday amid profit-taking and spillover pressure from the neighboring corn market, floor traders said.

 

September soybeans fell 3 1/2 cents to US$8.89 per bushel, while November soybeans closed down 4 1/2 cents at US$9.03 and January soybeans finished down 4 cents at US$9.18 1/2.

 

September soymeal ended US$2.50 lower at US$245.40 per short tonne, and December soymeal settled US$2.00 lower at US$252.60. September soyoil rose 13 points to 37.32 cents per pound, and December soyoil closed up 15 points at 38.02.

 

Soybeans began the day session firmer on borrowed strength from sharp gains in the wheat market, a floor trader said. CBOT September wheat, not bound by the typical 30-cent daily trading limit because it is in delivery, traded as much as 48 cents higher in early dealings but then trimmed gains a bit, allowing soybeans to retreat, he said.

 

Recent rallies in wheat futures have been the driver of gains in soybeans, and the slight pullback from a fresh all-time high Wednesday led to profit-taking in soybeans, analysts said. Spillover pressure from declines in the corn market also weighed on soybeans, they said.

 

"I think that the bean traders feel maybe they're 20-25-30 cents higher than they should be" due to recent spillover support from wheat, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

CBOT September wheat's pullback from the record high "allowed the cash grains - beans and corn - to think a little bit about their own fundamentals," Hannagan said. For soybeans, that includes talk of strong early harvest results and some expectations for a bearish crop report from the U.S. Department of Agriculture on Sept. 12, he said.

 

The trade is "starting to hear that the very earliest (soybean) harvest results are looking pretty good in areas where they thought it wasn't," Hannagan said. Although the USDA said only 14% of the U.S. soybean crop was dropping leaves as of Sunday, Hannagan said the trade was feeding off scattered dispatches from farmers about even the smallest harvest results.

 

A small improvement in the USDA's weekly crop ratingsfor soybeans also was seen as mildly bearish, a trader said. The agency rated 56% of the U.S. soybean crop in good-to-excellent condition, one percentage point above the previous week.

 

South Dakota had a seven-percentage-point increase in its good-to-excellent ratings, rising to 79% from the 72% reported last week.

 

In Iowa, 73% of the crop was reported in good-to-excellent condition, down two percentage points from last week. In Illinois, 55% of the crop was rated in good-to-excellent condition, up two percentage points from the previous week.

 

A feature to monitor for crops in the upper U.S. Midwest is the potential impact from the remnants of Hurricane Henriette, which was located in the Gulf of California between the Baja peninsula and western Mexico on Wednesday morning, according to DTN Meteorlogix. Henriette is forecast to track north into northwestern Mexico before dying out.

 

Moisture associated with this tropical system looks to move northeast into the continental U.S., and has the potential to bring some moderate rainfall to the upper Midwest during the next five days, Meteorlogix said.

 

In pit trades, Man Financial bought 500 November, while Fimat sold 500 November.

 

 

SOY PRODUCTS

 

CBOT soy product futures closed mixed as weakness in the soybean market weighed on soymeal, traders said. There was not much fresh news out for the soy complex, so soymeal trailed soybeans during much of the day session, they said.

 

Commodity fund buying of an estimated 3,500 contracts gave soyoil a boost, a trader added. Funds bought an estimated 2,000 soymeal contracts.

 

In pit trades, JP Morgan, Calyon and Rand Financial each bought 400 December soyoil. JP Morgan bought 1,000 December soymeal, and Iowa Grain bought 600 December soymeal.