September 19, 2007

 

CBOT Soy Review on Tuesday: End mixed in consolidative, two-sided trade

 

 

Chicago Board of Trade soybean futures ended mixed Tuesday, consolidating in choppy, two-sided trade after its recent run to multi-year highs.

 

November soybeans settled 1-cent higher at US$9.69 1/2. October soymeal settled US$2.30 higher at US$266.40 per short tonne, and December soymeal settled US$3.00 higher at US$272.70. October soyoil ended 24 points lower at 39.48 cents a pound, and December soyoil finished 32 points lower at 39.89.

 

The market tested either side on unchanged levels, with overbought conditions and a lack of follow through technical buying opening the door for a profit taking setback after futures rallied to 3-year highs Monday, analysts said.

 

Fundamental support was generated from concerns about possible planting delays in Brazil, with dryness in Mato Grosso seen stalling any early planting intentions, said Brian Hoops, president Midwest Market Solutions.

 

Commercial buying on the early price break underpinned prices as well, traders said. Meanwhile, another run to an intra high above the US$10.00 level in the 2008 July contract attracted producer selling, weighing on deferred futures over the course of the day, traders added.

 

The 3-year high in prices coupled with wide basis levels sets up a straight hedge by farmers in deferred months as a preferred trade, Hoops added.

 

Nevertheless, futures remain in a bullish uptrend, with supportive long range fundamentals surrounding tightening stocks, the need for increased global acreage and growing demand, keeping sellers hesitant to press the market, analysts added.

 

The DTN Meteorlogix Weather Service forecast said Brazil's largest soybean producing state Mato Grosso remains in the grip of hot and dry weather. There is no sign of any rainfall developing in northern Mato Grosso during the next 10-15 days. Any early planting of soybeans in northern Mato Grosso during the latter half of September will not take place this year with current indications that the dryness will persist at least into early October.

 

In pit trades, ADM Investor Services bought 300 November, Fimat and RJ O'Brien each bought 400 November. Rand Financial sold 600 November, MF Global sold 400 November and Tenco sold 300 November.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil futures correcting lower after an early run to 23 year highs failed to attract follow through buying. Overbought market conditions set the stage for a minor setback in prices, with the absence of fresh fundamental incentives generating a profit taking scenario despite strong gains in crude oil futures, analysts said.

 

Soymeal futures ended higher, carving out new contract highs once again, supported by strong global feed demand and a correction in the meal/oil spread amid soyoil price weakness, analysts said.

 

December oil share ended at 42.24% and the November/October crush ended at 50 3/4 cents.

 

In soymeal trades, buyers were scattered among various commission houses, with speculative fund buying estimated at 2,500 lots. JP Morgan sold 300 October, and Tenco sold 1,000 October.

 

In soyoil trades, buyers were lightly scattered among various commission houses. On the sell side, ADM Investor Services sold 600 December, Fimat sold 700 October and Iowa Grain sold 300 January. Speculative fund selling was estimated at 2,500 contracts.