October 3, 2006

 

CBOT Soy Review on Monday: Lower amid bearish supply fundamentals

 

 

Chicago Board of Trade soybean futures ended Monday's session posting modest declines, pressured by light speculative and local selling as bearish underlying fundamentals weighed on prices.

 

November soybeans finished 2 1/4 cents lower at US$5.45 1/4. December soymeal settled unchanged at US$163.50 per short tonne, while December soyoil ended 30 points lower at 23.94 cents a pound.

 

The market's lack of supportive features failed to allow futures to gain off strength in corn and wheat, with technical pressures and reports of good harvest yields dampening early price strength, said Mike Zuzolo, senior analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

Soybeans ended at session lows, as seasonal weakness related to outlooks for a strong harvest pace this week produced contention among traders, analysts added.

 

Nevertheless, mild support from was generated from news of South Korea buying U.S. soybeans and a higher-than-expected weekly export inspections figure. However, the demand news was not enough to sustain the market's gains in the face of bearish supply-side fundamentals, traders said.

 

Overall activity was relatively quiet, with trading volumes down amid the Yom Kippur holiday, as well as holidays in China, and India, a trader added.

 

Meanwhile, the DTN Meteorlogix forecast calls for mostly dry weather with variable temperatures, but in general above normal for the season. A few showers will develop in the Great Lakes, but they will bring less than one-half inch of rain. Harvest progress in corn and soybeans will be substantial with this stretch of warm and dry weather - totaling almost a 10-day run by the end of the week, Meteorlogix said in the forecast.

 

After the close, the U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 3 p.m. CDT. Analysts anticipate U.S. soybean harvest progress at 16%-26% complete.

 

In pit trades, Fortis bought 1,200 November, JP Morgan bought 400 November, and Citigroup and Rand Financial each bought 300 November. Fimat sold 1,000 November, Tenco sold 800 November, and Iowa Grain sold 400 November.

 

South American soybean futures ended higher, with the November futures settling 3 cents higher at US$6.18.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil firmly planted in negative territory. Soyoil futures were pressed lower by light speculative and local sales, as the market remains a follower of price movements in crude oil futures, said Zuzolo. The most active December futures fell to a one-week low, unable to generate buying amid spreading between the products and the market's energy influence.

 

Soymeal futures ended narrowly mixed in choppy trade. Futures held firm for most of the day, supported by technical buying and strength associated with soy product spreading, analysts said. The market has garnered technical strength amid ideas the market has shown a bottom based off its recovering prior lows, Zuzolo added. Nevertheless, late spillover pressure from soybeans managed to trim advances and press prices to session lows on the close, traders added.

 

December oil share ended at 42.28% and the November/October crush ended at 70 3/4 cents.

 

In soymeal trades, Calyon Financial bought 400 December and Fortis bought 300 December. Sellers were light scattered among various commission houses.

 

In soyoil trades, Calyon Financial bought 600 December, UBS Securities bought 500 December, and Prudential Financial and Fimat each bought 300 December. Bunge Chicago and UBS Securities each sold 400 December, and Fimat sold 300 October and 300 December.