September 23, 2006

 

CBOT Soy Review on Friday: Down; lacks support to sustain gains

 

 

Chicago Board of Trade soybean futures ended lower Friday, setting back after Thursday's technical gains amid the absence of supportive features.

 

November soybeans finished 8 3/4 cents lower at US$5.49 1/4. December soymeal settled US$2.80 lower at US$165.30 per short tonne, while December soyoil ended 48 points lower at 24.22 cents a pound.

 

The market backpedaled from Thursday's gains from the outset, as the market adjusted in an effort not to get ahead of its fundamental outlook, said John Kleist, analyst with Top Third Ag Marketing in Chicago.

 

The absence of price support, with lower soymeal values, declines in neighboring grains, weakness in outside commodities and ample world inventories combined to keep buyers sidelined, traders added.

 

The market had a good run up recently, but without a crutch from outside commodities and fears that the market could loose its export demand base if prices continue to climb, futures back-filled advances, Kleist added.

 

Meanwhile, futures continue to face bearish fundamentals, with outlooks for drier conditions in the western Midwest next week opening opportunities for harvest operations to bounce back after a wet weekend took some edge off prices, analysts said.

 

The DTN Meteorlogix forecast calls for rainfall of up to an inch in the western Midwest (west of the Mississippi River) Friday through early Saturday. Eastern Midwest areas will have episodes of showers and thunderstorms during the next 48 hours, with rainfall of up to 2 inches. Harvest progress will be held up across the entire Midwest because of these rains.

 

Next week, a center of cool and unsettled weather in the Midwest will move into the eastern U.S. This change promises a much more favorable period of harvest weather for the western Midwest during the six-to-10-day period, Meteologix reports. Harvest conditions will be slower to improve in the eastern Midwest due to persistent cool and unsettled conditions. The main areas for continued slowdowns in harvest will be Indiana, Ohio, Michigan and Kentucky. All states west of the Mississippi as well as Wisconsin and Illinois will have a more favorable harvest weather pattern, Meteologix forecasts.

 

In pit trades, Tenco bought 300 November and UBS Securities bought 300 January. On the sell side, Man Financial sold 800 November, ABN Amro sold 400 November, Goldenberg Hehmeyer sold 400 January and JP Morgan sold 300 November. Speculative fund selling was estimated between 2,000 and 3,000 contracts.

 

Day session volume for soybeans on the e-CBOT platform totaled 19,638 contracts.

 

South American soybean futures ended lower, with the November future settling 2 1/2 cents lower at US$6.17 1/2.

 

 

SOY PRODUCTS

 

Soy product futures stumbled lower, in tune with the defensive theme in soybeans. Soymeal futures prices retreated from Thursday's spike higher move. Technically inspired selling firmly planted the market in negative territory, allowing futures to satisfy near-term downside objectives, traders said. The most-active December future back pedaled into a chart gap, with the penetration of the contract's 50-day moving average - US$165.40 - providing additional pressure to extend the losses, traders add.

 

Soyoil futures ended lower across the board, falling to five-month lows, as the market continues to correct lower in unison with price declines crude oil futures, analysts said.

 

December oil share ended at 42.28%, and the November/October crush ended at 76 3/4 cents.

 

In soymeal trades, Rand Financial bought 500 December, JP Morgan bought 400 December and Man Financial bought 300 December. ABN Amro sold 600 December, Man Financial sold 400 December and Calyon Financial sold 300 December.

 

In soyoil trades, Rand Financial bought 1,000 December, JP Morgan bought 900 December, Fimat bought 400 December, and Bunge Chicago bought 400 October and 400 December. Calyon Financial, RJ O'Brien, and Rand Financial each sold 500 December, with additional selling widely scattered among various commission houses. Speculative fund selling was estimated at 2,000 contracts.