October 6, 2007

 

CBOT Soy Review on Friday: Settles lower on seasonal pressures

 

 

Chicago Board of Trade soybean futures ended lower across the board Friday, backpedaling on seasonal harvest pressure amid the absence of fresh supportive news.

 

November soybeans settled 13 3/4 cents lower at US$9.40 1/2 and January soybeans ended 12 1/4 cents lower at US$9.60. October soymeal settled US$6.30 lower at US$259.40 per short tonne, and December soymeal settled US$5.40 lower at US$265.40. October soyoil ended 5 points lower at 38.50 cents a pound, and December soyoil finished 15 points lower at 39.03.

 

Seasonal pressure, with favorable weather conditions for an active harvest weekend set the stage for the price declines, analysts said.

 

Commercial and producer selling coupled with speculative profit taking combined to firmly plant prices in negative territory, analysts added.

 

Overall activity remained light, with futures taking on a consolidative theme, as traders were unwilling to take on added risk heading into the weekend. The start of index fund spread rolling, favorable yield reports from early harvesting and weakness in outside inflationary markets applied further pressure to keep a defensive tonnee in the market, traders said.

 

Nevertheless, futures remained range bound, unable to challenge Wednesday's lows, as bullish underlying fundamentals, dryness issues in northern Brazil and strong demand outlooks continued to limit downside risks, a CBOT floor analyst said.

 

The DTN Meteorlogix Weather Service forecast said the soybean-growing areas of Brazil continue to be hot and dry, which has stalled planting activity. There is a glimmer of hope in the outlook for seven to 10 days out, but the forecast precipitation is subject to revision on a daily basis.

 

In Argentina, wet conditions are delaying planting of corn and soybeans, but the southern winter wheat belt has cooler and drier conditions for harvest.

 

Private analytical firm Informa Economics estimated 2007-08 U.S. soybean production at 2.647 billion bushels with a yield of 42.1 bushels per acre. In the September supply-and-demand report, the U.S. Department of Agriculture estimated soybean production at 2.619 billion bushels with a yield of 41.4 bushels per acre.

 

On Oct. 12, the U.S. Department of Agriculture is scheduled to release updated U.S. corn and soybean estimates at 8:30 a.m. EDT (1230 GMT).

 

In pit trades, buyers were lightly scattered among various commission houses. Bunge Chicago, Tenco and RJ O'Brien each sold 300 November, and Rand Financial sold 500 November. Speculative fund selling was estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, with soymeal the downside leader. Soymeal backpedaled to 3-week lows on spillover from soybeans, speculative and commercial sales, analysts say. The market continued its correction from prior gains, with unwinding of meal/oil spreads adding weight as well, traders add.

 

Soyoil futures ended modestly lower, but managed to gain product share on spreading between the products. However, spillover weakness from crude oil and declines in Malaysian palm oil futures applied pressure to keep prices trending lower, analysts said.

 

December oil share ended at 42.37% and the November/October crush ended at 53 3/4 cents.

 

In soymeal trades, Citigroup bought 600 December, and RJ O'Brien bought 300 December. Sellers were lightly scattered among various commission houses.

 

In soyoil trades, Bunge Chicago bought 400 December and Tenco bought 300 March. Bunge Chicago sold 300 December and 500 January. Speculative funds were estimated sellers of 1,000 lots.