September 30, 2006

 

CBOT Soy Review on Friday: Ends lower; corrects Thursday's rally

 

 

Chicago Board of Trade soybean futures ended lower Friday, retracing a portion of Thursday's gains on ideas the advances were overdone amid improved harvest opportunities for the U.S. Midwest.

 

November soybeans finished 5 1/4 cents lower at US$5.47 1/2. December soymeal settled US$0.30 higher at US$163.50 per short tonne, while December soyoil ended 13 points lower at 24.24 cents a pound.

 

The market adjusted lower after prices moved higher than they needed to in Thursday's rally, said Tim Hannagan, analyst with Alaron Trading in Chicago. A supportive stocks report sparked some bullish thoughts, but with favorable harvest conditions expected to promote an active cutting pace during the weekend, futures corrected lower, he added.

 

Speculative selling was a featured attraction, with buyers sidelined in the face of bearish fundamental outlooks, as favorable yield reports and ample nearby supplies make it tough to push prices higher, traders said.

 

The market is anticipating farmers harvesting soybeans and selling for cash, while holding corn amid its longer term demand prospects, said Hannagan. The outlook for mostly clear harvest conditions heading into next week kept beans dragging there feet in anticipation of potential cash selling pressure, he added.

 

Futures initially opened higher, buoyed by a lower than expected 2005-06 carryout figure amid a downward revision to the 2005 U.S. soy crop. However, with a potentially record setting 2006 crop ready for the combines, bullish optimism was quickly corralled, particularly without outside market support, said a CBOT commission house broker.

 

Meanwhile, the DTN Meteorlogix forecast says the next three to five days offer very good harvest weather in the Midwest corn and soybean belt. Only a few light showers in the upper Midwest and Great Lakes regions are expected through Sunday, with mainly dry weather expected across the Midwest through Wednesday. Temperatures are forecast to warm into the 80s Fahrenheit. This is a very favorable outlook for in-field dry down of crops, along with harvest progress, Meteorlogix said the forecast.

 

In pit trades, buyers were widely scattered among various commission houses. On the sell side, UBS Securities sold 1,000 November, Man Financial sold 700 November, ABN Amro sold 500 November and ADM Investor Services sold 400 November. Speculative fund selling was estimated at 2,500 contracts.

 

South American soybean futures ended lower, with the November future settling 8 cents lower at US$6.15.

 

 

SOY PRODUCTS

 

Soyoil futures ended lower across the board, backpedaling from Thursday's advances, pressured by weakness in energy markets for most of the day and end of the month and quarter position squaring, analysts said.

 

Soymeal futures ended mixed after holding gains for most of the day. Support was generated from spreading activity with soyoil, traders said. However, late corrections in corn and wheat attracted selling interest to trim advances down the stretch, traders added.

 

December oil share ended at 42.53%, and the November/October crush ended at 70 1/4 cents.

 

In soymeal trades, Fimat bought 1,000 December, Fortis bought 700 December, and JP Morgan bought 400 December. ADM Investor Services, Man Financial and JP Morgan each sold 400 December. Speculative fund buying is estimated at 2,000 contracts.

 

In soyoil trades, buyers ands sellers were scattered among various commission houses, with RJ O'Brien a seller of 800 December, and Man Financial and Tenco each sellers of 300 December. Speculative fund selling is estimated at 1,500 contracts.