October 22, 2005

 

CBOT Soy Review on Friday: Stumbles lower on Spec sales

 

 

Soybean futures on the Chicago Board of Trade ended sharply lower Friday, stumbling to nearly two-week lows on speculative selling attributed to a technical correction and fears tied to the spread of bird flu in Asia and Europe, traders said.

 

November soybeans ended 12 3/4 cents lower at US$5.72 3/4, December soymeal settled US$2.50 lower at US$169.40 a short tonne, while December soyoil ended 50 points lower at 24.48 cent a pound.

 

The bird flu angle in the market and its potential to be a big problem for soymeal feed demand coupled with a correction from a rally following last week's crop report brought the market back in line with demand fundamentals, said John Kleist of Kleist Ag Consulting.

 

The market essentially back tracked prior gains, filtering into a chart gap left from Oct. 12 between US$5.66 1/2 and US$5.76 1/2 basis the November contract, Kleist added.

 

The defensive tonnee was consistent from the outset with sharply lower Chinese soybean futures overnight tied to the spread of bird flu and its potential impact on soymeal feed demand cast a negative cloud over the market.

 

The early selling pressure set the tonnee for the market, with losses accelerating once pre-placed sell stop orders resting at the top of the November contract's chart gap were activated. Nevertheless, volume slowed after the initial speculative sales were exhausted with prices settling into a narrow trading range for the remainder of the day, traders said.

 

In pit trades, Bunge Chicago sold 800 December, Calyon Financial sold 1,500 November, Refco Investor Services, Citigroup, and Fimat each sold 1,000 November, Man Financial, O'Connor, RJ O'Brien and Refco each sold 500 November, Tenco sold 700 November. Commodity fund selling was pegged at 8,500 contracts.

 

South American soybean futures ended lower across the board. The November futures settled 16 1/4 cents lower at US$6.37.

 

 

SOY PRODUCTS

 

Soymeal futures ended lower across the board, pressured by speculative selling. The declines were tied to concerns that soymeal demand would decline if a widespread outbreak of bird flu in Asia and Europe caused the destruction of large poultry flocks overseas, traders said.

 

Soyoil futures finished lower across the board, gapping to nearly two-week lows on technical charts. Weakness in the energy sector took away some of the optimism tied to bio fuels, essentially take the edge off the market, said Kleist.

 

Technical selling and spillover pressure from soybeans added to the defensive posture of the market, traders added. However, commercial buying beneath the market cushioned the slide, providing a floor for futures.

 

December oil share ended at 40.93%, and the November/December crush was at 58 3/4 cents.

 

In soymeal trades, Bunge Chicago bought 300 December, Cargill bought 600 December. Prudential Financial sold 400 December, Bunge Chicago, Cargill, Citigroup and Refco were featured sellers. Fund selling was estimated at 1,400 contracts.

 

In soyoil trades, ADM Investor Services, Bunge Chicago, Citigroup and Tenco each bought 500 December, Cargill and Refco each bought 400 December. Bunge Chicago sold 300 December, ABN Amro, Refco Investor Services, and Rand Financial each sold 500 December, Man Financial and Merrill Lynch each sold 400 December, RJ O'Brien sold 900 December Fimat and Calyon Financial each sold 300 December. Commodity funds were sellers of 3,000 contracts and commercial were buyers of 3,000 contracts.