September 9, 2006

 

CBOT Soy Review on Friday: Lower; fails to sustain early gains

 

 

Chicago Board of Trade soybean futures settled lower Friday, ending the week on the defensive, as the market failed to sustain early advances in the face of bearish fundamentals.

 

September soybeans ended 1 1/2 cents lower at US$5.37, and November soybeans finished 2 cents lower at US$5.48. December soymeal settled US$2.40 lower at US$160.80 a short tonne, while December soyoil ended 28 points higher at 25.11 cents a pound.

 

Light trade consolidation ahead of the weekend and next week's crop reports helped boost prices for most of the day, but without fresh supportive features, large crop and carryout projections remained bearish influences to limit buying interest, analysts said.

 

A choppy two-sided atmosphere was the theme of the day, as the market appears unwilling to take on added risk until the U.S. Department of Agriculture releases its revised production and supply and demand estimates next week, traders added.

 

Otherwise, activity remained subdued, with light end-user buying providing underlying support to limit downside potential, traders added.

 

Meanwhile, the average of analysts estimates taken from a survey compiled by Dow Jones Newswires for 2006-07 U.S. soybean production based on conditions as of Sept. 1 pegs the crop at 3.093 billion bushels. The estimates ranged from 2.994 billion bushels to 3.192 billion bushels. 2005-05 ending stocks were pegged at 503 million bushels from estimates that ranged from 485 million to 523 million bushels. The average of estimates pegged 2006-07 ending stocks at 566 million bushels. The estimates ranged from 460 million to 696 million bushels.

 

The U.S. Department of Agriculture is scheduled to release its September production report at 7:30 a.m. CDT (1230 GMT) Tuesday, Sept. 12.

 

The DTN Meteorlogix forecast calls for thundershowers to cover most of the western Midwest (west of the Mississippi River) during the coming weekend. Rainfall of up to 1 1/2 inches is possible, with the heaviest rains concentrated in Iowa. The showers will move into the eastern Midwest during the first part of next week, with up to one inch of rainfall. Temperatures will cool to below-normal values in the western and northern areas of the Midwest, and normal- to below-normal readings in the eastern areas by the middle of next week.

 

In pit trades, FCStonnee, Calyon Financial and Citigroup each bought 500 November. Sellers were scattered among various commission houses.

 

South American soybean futures ended higher, with the September future settling 16 1/2 cents higher at US$5.97.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed Friday, with a mild correction in product spreads from recent strength in soymeal boosting soyoil prices, analysts said. Soyoil futures ended higher across the board, buoyed by spreads and a combination of speculative and commercial buying, analysts add. A supportive weekly export sales report from the USDA aided soyoils strength, analysts add.

 

Soymeal futures finished lower, garnering mild pressure from soyoil/soymeal spreading amid the absence of any other fresh supportive influences, traders said. Technical selling added to the losses, with the ability of the December contract to slip below its 10-day and 20-day moving averages attracting selling pressure as well, traders added.

 

September oil share ended at 43.70%, and the September crush ended at 79 3/4 cents.

 

In soymeal trades, buying and selling was scattered among various commission houses.

 

In soyoil trades, Fimat bought 1,800 December, Tenco bought 1,400 December, Bunge Chicago bought 700 December, and Man Financial bought 500 December. Citigroup sold 600 December, JP Morgan, Fortis, and Prudential Financial each sold 300 December. Speculative fund buying was estimated at 2,000 contracts and commercial buying was pegged at 1,000 contracts.