October 26, 2006

 

CBOT Soy Review on Wednesday: Lower; drifts from highs on profit taking

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, setting back on profit taking pressure, following a midday run to new contract highs.

 

November soybeans finished 1 1/2 cents lower at US$6.22, and January soybeans ended 1 1/2 cents lower at US$6.35 1/2. December soymeal settled US$0.40 lower at US$185.20 per short tonne, while December soyoil ended 6 points lower at 26.58 cents a pound.

 

Prices faltered after upside momentum faded at higher levels, with a late drop in wheat futures spilling over to spark speculative selling interest, analysts said.

 

The market kept pace with neighboring grain futures in its run to new highs earlier, but it was hard to fundamentally justify the lofty prices in the face of record supplies, said Dan Basse, president AgResource Company in Chicago.

 

Speculative funds have been relentless in their pursuit of keeping futures moving in tandem with price strength in corn and wheat, but traders know at some point fundamentals will have to kick in and rule the day, Basse added.

 

Prices spiked to new highs for the current move and a new contract high for the January future amid perceptions that soybeans are undervalued in relation to plus-US$3.00 corn and US$5.00 wheat, traders said. This notion has fueled a speculative push that feeds on itself upon crossing hurdles at overhead resistance levels, traders added.

 

Nevertheless, record crops, overbought conditions, a poor finish in wheat, and talk of fresh farmer selling on the rally managed to temper the upward tonnee, a floor analyst said.

 

Meanwhile, concerns that the market is pricing itself out of export consumption applied light pressure, as rising prices at the U.S. Gulf have made Argentine exports more competitive in world markets, Basse added.

 

On tap for Thursday, the U.S. Census Bureau will release its September soy crush report 7 a.m. CDT. Analysts look for a crush figure near 143.8 million bushels. U.S. Department of Agriculture is scheduled to release its weekly export sales report 7:30 a.m. CDT. Analysts anticipate commitments in the 600,000- to 800,000-metric-tonne range.

 

In pit trades, Calyon Financial bought 1,200 January, and Citigroup and USA Trading each bought 500 January. Goldenberg Hehmeyer bought 300 November and 500 January, and Prudential Financial bought 400 November.

 

JP Morgan sold 800 November and 500 January, and Man Financial sold 700 January. Calyon Financial sold 500 January, Citigroup sold 400 January, and Prudential Financial sold 400 November.

 

Day-session volume for soybeans on the e-CBOT platform totaled 57,529 contracts.

 

South American soybean futures ended lower, with the November futures settling 11 1/2 cents lower at US$6.82.

 

 

SOY PRODUCTS

 

Soy product futures ended Wednesday's session posting modest declines, drifting lower in tune with a late setback in soybeans. Soymeal futures stumbled lower on speculative and local selling as exhausted buying interest at session highs opened the door for the retreat, analysts said. The market climbed to four-month highs on borrowed strength from soybeans, but once soybeans fell, buyers quickly ran for cover, traders added.

 

Soyoil futures were lower, following in the footsteps of soybeans. Borrowed price strength from soybeans and crude oil futures lifted prices to two-month highs, but as was the case in soymeal, the market failed to find willing buyers once soybeans trekked lower, analysts said.

 

December oil share ended at 41.78% and the November/December crush ended at 77 3/4 cents.

 

In soymeal trades, buyers and sellers were wisely scattered among various commission houses, with JP Morgan a featured seller of 500 December and 1,500 January.

 

In soyoil trades, JP Morgan bought 1,500 December and 400 January, Bunge Chicago bought 600 December, and Fimat bought 600 December and 300 January. Man Financial and Prudential Financial each bought 400 December. Sellers were scattered among various commission houses, with ADM Investor Services, Bunge Chicago, Calyon Financial, Citigroup, Fimat and Prudential featured sellers.