November 1, 2006

 

CBOT Soy Review on Tuesday: Lower on technical, fundamental pressure

 

 

Chicago Board of Trade soybean futures ended lower Tuesday, backpedaling from prior gains as overbought conditions and end-of-month position squaring created a corrective marketplace.

 

November soybeans finished 9 1/2 cents lower at US$6.30 1/4, and January soybeans ended 9 cents lower at US$6.44 1/4. December soymeal settled US$2.00 lower at US$189.60 per short tonne, while December soyoil ended 44 points lower at 26.83 cents a pound.

 

The combination of producer selling, and big deliveries showing the availability of soybean supplies weighed on prices, with end-of-the month profit-taking featured in the absence of speculative fund buying, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

The market was vulnerable to a setback, as weakness in outside markets and ideas counter-seasonal gains of nearly US$1.00 during October in the face of abundant supplies generated some nervous selling pressure, traders added.

 

The theme was consistent from the outset. Broad-based commodity weakness and the absence of a crutch from corn and wheat provided little incentive for buyers to extend recent gains, a CBOT floor analyst said.

 

Meanwhile, CBOT reported deliveries against the November contract totaled 1,862 lots, a figure above the high end of analysts' expectations of 1,500 lots. The house account at Term Commodities was the featured issuer with no strong stoppers reported, analysts said.

 

The DTN Meteorlogix weather forecast calls for harvest delays to continue in Indiana, Michigan and Ohio through Wednesday. The area is already notably behind average in fall harvest progress, and the showers now forming will further complicate the harvest effort. The last half of this week offers an opportunity for all areas of the central U.S. to make good harvest progress, Meteorlogix reported.

 

In pit trades, Man Financial and Citigroup each bought 300 January. Iowa Grain and JP Morgan each sold 400 January, FC Stonnee sold 300 January with additional sellers widely scattered among various commission houses.

 

Day session volume for soybeans on the e-CBOT platform totaled 31,789 contracts.

 

South American soybean futures ended lower, with the November futures settling 9 cents lower at US$6.96 1/2.

 

 

SOY PRODUCTS

 

Soy product futures scampered lower in unison with losses in soybeans.

 

Soyoil futures were the downside leader of the products, pressured by speculative selling. Spillover weakness from crude oil amid the market's energy links and corrective end-of-month selling from overbought conditions weighed on prices, analysts said.

 

Soymeal futures stumbled lower, falling under the defensive influence of declines in soybeans. The market fell under the weight of pressure from other markets, but managed to gain product share in the face soyoil/soymeal spread unwinding, analysts said.

 

December oil share ended at 41.44% and the November/December crush ended at 82 cents.

 

In soymeal trades, buyers and sellers were widely scattered among various commission houses.

 

In soyoil trades, speculative fund selling was estimated at 2,000 contracts. Citigroup and JP Morgan each sold 400 December, Bunge Chicago and RJ O'Brien each sold 300 December. ADM Investor Services sold 400 March. Buyers were widely scattered among commission houses, with JP Morgan a buyer of 800 December.