September 28, 2006

 

CBOT Soy Review on Wednesday: Drifts lower on bearish fundamentals

 

 

Chicago Board of Trade soybean futures settled lower Wednesday, quietly setting back amid bearish fundamentals in the absence of outside support.

 

November soybeans finished 4 1/4 cents lower at US$5.42 1/2. December soymeal settled US$2.00 lower at US$161.50 per short tonne, while December soyoil ended 7 points lower at 24.06 cents a pound.

 

The market was left to its own fundamentals, with large supplies and reports of strong yields providing little incentive to attract buyers without spillover support from neighboring grain futures, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

Futures hovered within the week's trading range, struggling to generate lasting momentum. The market is seemingly stuck in a range, as large supplies cap upside movement while a lack of farmer selling limits downside pressure as the speculative sector is already heavily short the market, Scoville added.

 

Traders say soybeans are doing well to hold current levels heading into the bulk of the harvest, with diverging soymeal and soyoil prices promoting sideways action in soybeans as well.

 

Lingering concerns over approaching rains in the eastern Midwest slowing harvest operations coupled with firm cash prices continue to provide light support, but the weight of a large new crop and ample old crop inventories remains a hindrance to upside moves, analysts said.

 

Meanwhile, Cropcast Weather Services forecast said rain totals and coverage for the Midwest have been scaled back outside of the Great Lakes for the balance of the week.

 

Much of the western Midwest will encounter relatively dry weather for nearly a week, while the eastern Midwest will generally see four days of drier weather, beginning Sunday, Cropcast forecast. However, northern Ohio and northern Indiana are most likely to encounter further harvest delays, while the southeastern Midwest does not currently have any notable rains in the forecast for 2-weeks, Cropcast added.

 

In pit trades, buyers and sellers were scattered among various commission houses, with ABN Amro and JP Morgan featured buyers and UBS Securities a key seller on the day.

 

South American soybean futures ended higher, with the November future settling 1/4-cent higher at US$6.22.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, after a choppy session filled with two-sided action, analysts said. Soymeal futures stumbled lower in unison with soybeans. The market was weighed upon by technical pressures and spreading between the products, with weakening cash prices aiding the lower tonnee, traders said.

 

Soyoil futures ended modestly lower, after testing both sides of unchanged levels during the day. The market followed the ups and downs of crude oil futures, but ample nearby supplies and late declines in soybeans served as pressuring features to pin prices in negative territory down the stretch, traders added.

 

December oil share ended at 42.69%, and the November/October crush ended at 71 cents.

 

In soymeal trades, buyers and sellers were widely scattered among various commission houses.

 

In soyoil trades, Bunge Chicago bought 500 December and Rand Financial bought 400 December. Calyon Financial sold 300 December, and Tenco was a seller of 400 December.