September 29, 2007

 

CBOT Soy Review on Friday: Lower; succumbs to end-of-quarter profit taking

 

 

Chicago Board of Trade soybean futures ended Friday's session on the defensive, succumbing to end-of-month/quarter profit taking with supportive stocks data aiding the retreat, analysts said.

 

November soybeans settled 17 3/4 cents lower at US$9.91 and January soybeans ended 16 3/4 cents lower at US$10.08 1/2. October soymeal settled US$6.50 lower at US$276.30 per short tonne, and December soymeal settled US$6.80 lower at US$282.00. October soyoil ended 19 points lower at 39.49 cents a pound, and December soyoil finished 35 points lower at 40.00.

 

The market fell prey to speculative position squaring, as traders booked some profits after catapulting to new contract highs Thursday, analysts added.

 

A higher-than-expected quarterly grain stocks figure from the U.S. Department of Agriculture set the lower theme in motion, as it was seen providing a little more cushion for tightening projected 2007-08 inventories. However, end-of-month profit taking stood out as the key driver that kept buyers on the run throughout, a CBOT floor analyst said.

 

Technically inspired selling was a key influence, with declines accelerating once the active November future pierced below solid support at US$9.92, which is the bottom of Thursday's upside price gap on the daily chart, traders said. Otherwise, futures had little other bearish influences.

 

Nevertheless, analysts say the losses were no more than a profit-taking setback in a bull market, as weakness in the U.S. dollar, lingering worries over the need to stimulate increased global acreage and dryness issues for the start the Brazilian plantings continue to limit downside risks, analysts said.

 

USDA reported Sept. 1 stocks in all positions at a record 573 million bushels, up 27% from Sept. 1, 2006. The average of analysts' estimates surveyed by Dow Jones Newswires anticipated U.S. soybean supplies as of Sept. 1 at 552 million bushels. The estimates ranged from 543 million to 558 million bushels. Indicated disappearance during the June-August period was 519 million bushels, up 4% from last year.

 

The DTN Meteorlogix Weather Service forecast said dry weather and near- to above-normal temperatures continue in Brazil's northern Mato Grosso. Little change in the forecast is expected during the next 10 days. Long-range guidance indicates scattered showers and thunderstorms could develop during the week of Oct. 7. Any significant soybean planting cannot take place until the rains arrive, Meteorlogix said.

 

In pit trades, ADM Investor Services and RJ O'Brien each bought 600 November, Rand Financial bought 300 January and Shatkin/Arbor bought 300 November. MF Global and Rand Financial each sold 1,000 November. Speculative fund selling was estimated between 5,000 and 6,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures stumbled lower in unison with the profit-taking setback in soybeans. Soymeal futures fell on profit taking, with a higher soybean stock figure helping encouraging selling interest, analysts said. Soymeal lost product share to soyoil as well, as traders took profits on the meal/oil spread after meal prices rallied to new highs Thursday, analysts added.

 

Soyoil futures backpedaled in step with the rest of the soycomplex, succumbing to month/quarter end position squaring, traders said. However, long range bullish outlooks remained underpinning features to limit losses, traders added.

 

December oil share ended at 41.49% and the November/October crush ended at 51 cents.

 

In soymeal trades, Bunge Chicago bought 400 December and Fimat bought 300 December. Fimat and UBS Securities sold 300 December. Speculative fund selling was estimated at 3,000 lots.

 

In soyoil trades, Fimat bought 500 December, UBS Securities and Bunge Chicago each bought 300 December. Citigroup sold 300 December with additional sellers scattered among various commission houses. Speculative fund selling was estimated at 2,000 lots.