October 20, 2007

 

CBOT Soy Review on Friday: Down; soyoil weakness attracts profit-taking

 

 

Chicago Board of Trade soybean futures ended lower Friday, scaling back the week's gains on pre-weekend profit-taking amid spillover pressure from a setback in soyoil futures.

 

November soybeans settled 8 1/4 cents lower at US$9.83 1/4 and January soybeans ended 9 cents lower at US$10.01 1/4. December soymeal settled US$1.80 lower at US$276.30. December soyoil finished 43 points lower at 40.56 cents.

 

The market staged a minor technical retreat, with a modest correction in soyoil and crude oil taking the edge off the market, analysts said. Soybeans had been dependent on soyoil for its upside moves lately, and without that support, futures had little to underpin prices, said John Kleist of Kleist Ag Consulting.

 

Technically inspired selling was featured as well, with producer selling at current lofty levels making soybeans look a little pricey near the US$10.00-per-bushel level, Kleist added.

 

The absence of fresh supportive news coupled with early weakness in outside inflationary markets provided little incentive for buyers to extend the market's recent uptrend, analysts said. The market lost its crutch, with crude oil and metals markets retreating as well as exhausting speculative buys that buoyed futures in recent sessions, analysts added.

 

Light corn/bean spreading aided the lower tonnee amid higher projected 2008 acreage from a private analytical firm.

 

Nevertheless, longer-term bullish outlooks are seen limiting downside moves as supportive underlying demand prospects remains an underpinning theme, Kleist added.

 

The DTN Meteorlogix Weather Services forecast calls for dry weather across the central U.S. on Saturday. However, light rain will redevelop in the region Sunday, which will inhibit significant harvest progress. Yield and quality loss to both corn and soybeans are feared in areas that have yet to harvest because of the very wet conditions in the past two weeks, Meteorlogix said.

 

The 10-day time frame through the last of October continues to show an unsettled weather pattern. However, the trend of weather systems is leaning toward a progressive, faster-moving track across the country. This offers the prospect of lighter rains in the region. This is still a difficult scenario for harvest, notably west of the Mississippi River, Meteorlogix reports.

 

In Brazil, recent rainfall has helped improve soil moisture for planting early soybeans in Mato Grosso, Brazil's top soybean-producing state, Meteorlogix said. Isolated to widely scattered thundershowers are possible through the weekend. Heavier and more widespread rain may redevelop next week.

 

Private analytical firm Informa Economics estimated 2008-09 U.S. soybean planted acreage at 71.7 million acres, traders said Friday. The firm's soybean planted acreage estimate is larger than the 63.7 million acres planted this year.

 

In pit trades, Fimat bought 400 March and Tenco sold 400 November. Speculative fund selling was estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, with soyoil taking a leadership role in the complex once again. Soyoil futures backpedaled lower, with weakness in crude oil uncovering speculative profit-taking. The market took a breather from its recent ascent, with traders booking a few profits after setting new 23-year highs on continuation charts Thursday, analysts said. Nevertheless, the setback is seen only as a minor correction, as there is still a bullish perception associated with biofuels derived from soyoil, Kleist said.

 

Soymeal futures ended lower in step with the rest of the complex, pressured by light speculative sales. However, the market did garner some product share on profit-taking on oil/meal spreads, analysts said.

 

December oil share ended at 42.33% and the November/December crush ended at 70 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with JP Morgan selling 300 December and MF Global selling 400 December. Speculative funds were net sellers on the day.

 

In soyoil trades, Tenco bought 300 December and 300 January, Fimat bought 400 December and MF Global bought 300 December. Bunge Chicago and RJ O'Brien each sold 300 December. Commercial buying was estimated at 1,500 lots and speculative fund selling was estimated 1,500 lots.