October 31, 2007
 
CBOT Soy Review on Tuesday: Lower on profit taking and weak outside markets

 

 

Chicago Board of Trade soybean futures stumbled Tuesday, backpedaling on speculative profit taking, succumbing to the influence of weakness in outside inflationary markets.

 

November soybeans settled 19 cents lower at US$9.92 and January soybeans ended 19 1/2 cents lower at US$10.09 1/4. December soymeal settled US$5.30 lower at US$274.70. December soyoil finished 52 points lower at 41.68.

 

The market experienced an overdue correction from its recent run up in prices, with crude oil and metals futures pummeled and nervousness ahead of Wednesday's Federal Reserve rate decision attracting speculative sales, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

Reports that a large investment bank advised its clients that commodities, such as crude oil, gold and agricultural futures were ripe for some tactical profit taking added pressure, Scoville added.

 

Many participants took the opportunity to take some profits off the table, with end-of -the-month positioning enticing traders to shed some length in the market, analysts said. Meanwhile, positioning ahead of first notice day for November futures were featured as well.

 

Nevertheless, analysts say the market remains in an uptrend, but after recent gains and a lack of support from outside markets, futures were overdue for a minor correction.

 

Analysts expect deliveries against the CBOT November soybean contract to fall in a range of 1,000 to 4,000 lots, with most analysts leaning toward a range of 1,000 to 1,500 lots. The amount of deliveries will depend on the willingness of a large commercial firm to put out receipts, analysts said.

 

The DTN Meteorlogix forecast sees a generally dry weather pattern in place during the rest of this week in the U.S. Midwest. This pattern will be favorable for moving soybean harvest well into its late stages.

 

Soybean areas in Brazil have an improved rainfall chance during the next five days after some uncertainty regarding rain chances earlier this week. Southern bean areas will have moderate to heavy rains over the next five days, maintaining high available soil moisture for soybeans. Northern soybean areas may see showers redevelop by this coming weekend. The only area of continued dryness is in western Bahia, with dry and very warm conditions, Meteorlogix reports.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated near 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures fell in unison with soybeans, influenced by broad based commodity weakness. Soyoil futures retreated from Monday's climb to new contract highs, as the market continued to follow the lead of crude oil futures, analysts said. Speculative longs took profits, as the market lacked fresh supportive news to maintain Monday's lofty gains, analysts added.

 

Soymeal follow the rest of the soy complex, backpedaling on speculative sales as well. Nevertheless, soyoil continued to gain product share on spreads, traders said.

 

December oil share ended at 43.13% and the November/December crush ended at 70 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated near 3,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated near 4,000 lots.