September 12, 2006

 

CBOT Soy Review on Monday: Grinds lower, bearish fundamentals weigh

 

 

Chicago Board of Trade soybean futures ended lower Monday, as bearish fundamental influences continued to cast their cloud over the market.

 

September soybeans ended 5 cents lower at US$5.32, and November soybeans finished 3 1/2 cents lower at US$5.44 1/2. December soymeal settled unchanged at US$160.80 a short tonne, while December soyoil ended 19 points lower at 24.92 cents a pound.

 

The defensive tonnee was consistent from the outset, with prices sliding to new move lows, as outlooks for a larger U.S. soy crop in Tuesday's government reports, ample world supplies and weakness in outside markets combine to weigh on prices, analysts said.

 

Speculative selling led the move lower, as buyers remained reluctant to challenge the downtrend heading into Tuesday's crop report. Nevertheless, futures did manage to trim declines after midday as a light recovery in outside markets opened the door for traders to square some positions heading down the stretch, traders added.

 

Meanwhile, some traders expressed concern that the market has dialed in a pretty bearish scenario, and it would be hard to produce a bearish production number in Tuesday's crop report.

 

The average of analysts estimates taken from a survey compiled by Dow Jones 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. The 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) on Tuesday.

 

The DTN Meteorlogix forecast keeps a predominantly wet weather pattern in place over the main corn and soybean belt in the next 10 days. Rainfall of two or more inches will develop through Monday night in eastern Iowa, Missouri and central Illinois, moving into the eastern Midwest (Indiana, Ohio) Tuesday.

 

Drier weather will cover the region during the last part of this week, but showers and rain will bring above-average precipitation to the region again through the middle portion of next week. The rainy weather pattern is accompanied by cool temperatures, and will delay the ripening stage of corn and soybeans, Meteorlogix said in the forecast.

 

In pit trades, buyers were scattered among various firms. Rand Financial sold 600 November, FCStonnee and RJ O'Brien each sold 500 November, and Man Financial and Fortis each sold 300 November. Speculative funds were estimated sellers of 2,000 contracts.

 

South American soybean futures ended lower, with the September futures settling 15 cents lower at US$5.82.

 

 

SOY PRODUCTS

 

Soy products ended mixed Monday, with spreading between the products serving as the key for the divergence in prices. Soymeal futures ended narrowly mixed, managing to recover from an early drop to new contract lows, as light short-covering interest and spreading activity allowed the market to gain some product share, analyst said.

 

Soyoil futures ended lower across the board, with active contracts falling to their lowest levels since mid-April. The continued decline in crude oil prices, technical weakness and spillover from soybeans set the tonnee for the lower theme, analysts said. Speculative-led selling was a featured attraction, but futures managed to end at session highs, timing declines on a late recovery in outside inflationary markets, traders added.

 

September oil share ended at 43.55%, and the September crush ended at 83 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with Calyon Financial a seller of 300 December and Tenco a seller of 600 December.

 

In soyoil trades, Bunge Chicago and Prudential Financial each bought 500 December, JP Morgan bought 300 December and Citigroup bought 700 December. Fortis sold 2,800 December, Fimat sold 400 December, and Term Commodities sold 300 December. Speculative fund selling was estimated near 3,000 contracts.