September 20, 2006

 

CBOT Soy Review on Tuesday: Lower; lacked supportive features

 

 

Chicago Board of Trade soybean futures stumbled lower Tuesday, backpedaling from recent gains amid the absence of supportive features to sustain prior advances.

 

November soybeans finished 8 3/4 cents lower at US$5.44 1/4. December soymeal settled US$2.50 lower at US$162.60 per short tonne, while December soyoil ended 40 points lower at 24.55 cents a pound.

 

The market didn't have a reason to put any additional premium into prices, with the weight of bearish fundamentals heading into the harvest season casting a defensive cloud over the market, said Brian Hoops, president Midwest Market Solutions in Yanktonne South Dakota.

 

Technical selling pressure as active contracts penetrated nearby support levels coupled with weakness in outside markets were bearish influences to help keep the defensive theme intact, traders added.

 

The market isn't showing any major harvest delays at this point, temperatures will warm back up after a midweek cold snap and with seasonal trends pointing lower heading into the harvest, and buyers were held at bay, added Hoops.

 

Otherwise, activity was subdued for most of the day, with the absence of any significant buying allowing sellers to firmly plant prices in negative territory, traders said.

 

The DTN Meteorlogix forecast calls for some frosty weather Tuesday night into Wednesday, notably in southern Minnesota and northern Iowa. Temperatures will dip into 29-35 degrees Fahrenheit. Cold-weather damage to crops will be minimal, due to a large percentage of soybeans already dropping leaves in the Midwest.

 

A larger concern to the region is a continued high chance for rainfall during the next week to ten days. A brief period of dry weather through Wednesday is in store throughout the Midwest; however, the western half of the region (west of the Mississippi) may have rainfall of up to one-and-one-half inch Thursday and from one-quarter to three-quarters of an inch in the Great Lakes and the eastern Midwest Friday. The rain will inhibit harvest progress, Meteorlogix reports.

 

In pit trades, buyers and sellers were scattered among various firms with JP Morgan a featured buyer of 1,000 November, while UBS Securities and ABN Amro were key sellers of 1,400 and 500 November contracts respectively. Speculative funds were estimated net sellers on the day.

 

Day session volume for soybeans on the e-CBOT platform totaled 20,225 contracts.

 

South American soybean futures ended higher, with the November future settling 4 1/2 cents higher at US$6.07 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, falling in step with losses in soybeans. Soymeal settled lower, retracing Monday's advances as technical selling and borrowed weakness from soybeans attracted speculative selling, traders said.

 

Soyoil futures ended lower, falling to 5-month lows. The market stumbled in unison with soybeans, with the influence of weakness in crude oil futures attracting speculative sellers to the market, analysts said.

 

December oil share ended at 43.02%, and the November/October crush ended at 79 cents.

 

In soymeal trades, Shatkin/Arbor bought 600 December, Fimat bought 300 December, with Calyon Financial a seller of 300 December.

 

In soyoil trades, Fortis bought 1,700 December, Bunge Chicago bought 400 December, Citigroup and Fimat each bought 300 December. RJ O'Brien and UBS Securities each sold 600 December, Bunge Chicago and ABN Amro each sold 500 December, Calyon Financial sold 400 December, with additional sellers widely scattered among commission houses. Speculative fund selling was estimated between 2,000 and 3,000 contracts.