September 7, 2006

 

CBOT Soy Review on Wednesday: Stumbles lower; lacks fundamental strength

 

 

Chicago Board of Trade soybean futures stumbled lower Wednesday, with prices backpedaling on speculative led sales amid the absence of fresh fundamental strength in the market.

 

September soybeans ended 7 1/4 cents lower at US$5.34, November soybeans finished 7 1/2 cents lower at US$5.46 3/4. December soymeal settled US$3.00 lower at US$161.60 a short tonne, while December soyoil ended 21 points lower at 24.89 cents a pound.

 

The market's early attempt to rally prices off oversold conditions failed to attract follow through momentum, as bearish production forecasts and ample domestic and world supplies remain a hindrance to upside movement, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

The market followed a similar path to Tuesday's session, with minor short covering rallies faltering once speculative buying was exhausted, Hoops added.

 

Technically motivated selling was a featured attraction, with the most active November future plunging to a 19-month low. The market's losses accelerated down-the-stretch with the penetration of long term technical support at US$5.50 basis November, uncovering pre-placed sell-orders to firmly plant prices in negative territory, traders said

 

The November contract fell to its lowest level since Feb. 11, 2005, with traders saying bearish technical momentum was rekindled after the market satisfied a downside objective of settling prices below the US$5.50 level. The November contract also came within 4 cents of challenging its contract low at US$5.42, analysts added.

 

Meanwhile, optimistic views toward new crop U.S. production following ideal August crop conditions in the Midwest remains a dominant force in the market. However, ideas rising private crop projections and bearish supply forecasts are adequately factored into prices managed to promote sideways trade for most of the day, before bearish momentum kicked what little legs the market had beneath it, said a CBOT floor broker.

 

Meanwhile, the DTN Meteorlogix forecast said calls for generally dry conditions through Thursday. A few light showers will develop in the upper Midwest on Friday, followed by showers during the weekend in Iowa, Minnesota and Wisconsin. The weather trend will be favorable for crop maturation and early harvest progress across the region.

 

In pit trades, buyers and sellers were scattered among various commission houses.

 

South American soybean futures ended lower, with the September future settling 7 1/4 cents lower at US$5.94.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, with Soymeal stumbling lower after early price strength faded. Soymeal futures ended lower across the board, with the active December future retracing Tuesday's short covering gains. The inability of the market to generate follow through buying once futures tested Tuesday's highs, uncovered selling pressure, with technical sales cementing the lower tonnee after the December contract penetrated support at the contract's 10-day and 20-day moving averages, analysts said. Spillover pressure from faltering soybean prices down the stretch added to the declines as well, traders said.

 

Soyoil futures ended on the defensive, continuing its speculative led correction from prior gains. The market back pedaled in unison with setbacks in the energy sector, analysts said.

 

September oil share ended at 43.36%, and the September crush ended at 82 cents.

 

In soymeal trades, buying and selling was widely scattered among various firms

 

In soyoil trades, Fimat bought 1,100 December, Bunge Chicago bought 500 December, Rosenthal bought 500 July, and Citigroup bought 300 December. Citigroup sold 800 December and 600 March, JP Morgan sold 500 December, and Fimat sold 400 December. Speculative funds were net sellers on the day.