November 2, 2007

 

CBOT Soy Review on Thursday: Crude oil weakness weighs on market

 

 

Spillover pressure from outside markets and profit-taking pulled Chicago Board of Trade soybean futures lower Thursday, despite solid weekly export sales, traders and analysts said.

 

November soybeans closed 19 1/4 cents lower at US$9.90 3/4 per bushel, and January soybeans settled 19 1/4 cents lower at US$10.06 1/2. December soyoil fell 24 points to 42.07 cents per pound, while December soymeal ended down US$7.50 at US$272.10 per short tonne.

 

Weakness in crude oil dragged on CBOT soybeans during the session, while a pullback in gold added to the bearish tonnee, an analyst said. Softer outside markets opened the door for profit-taking in soybeans, a floor trader said.

 

There also was some technical selling as the January contract slipped below its 10-day moving average for the first time since Oct. 25, a floor trader said. Commodity funds sold an estimated 6,000 contracts. In pit trades, ADM, JP Morgan and RJ O'Brien each sold 500 January.

 

Market orders to sell electronic January soybeans at the opening caused an atypical gap between the trading range for prices on the screen and in open auction trading, traders said. January soybeans in open auction trading fell as low as US$9.94, while the contract dropped to US$9.80 1/2 on the e-cbot electronic platform.

 

Traders questioned trades conducted between 10:30 a.m. and 10:36 a.m. EDT, according to the exchange. However, the CME Group, which runs the CBOT, attributed the disparity to volatile market conditions and said the trades would stand.

 

Prices fell Thursday even though weekly export sales were seen as strong. The U.S. Department of Agriculture said weekly soybean export sales were 740,600 metric tonnes for the week ended Oct. 25, within the 600,000 to 800,000 tonnes expected by analysts. The sales were 60% above the level sold the previous week, according to the USDA. China and Mexico were the largest buyers on the week.

 

In Brazil, rainfall continues to be forecast in the next week for all soybean areas except for western Bahia, according to DTN Meteorlogix. That is a favorable outlook for soil moisture in the country, the weather firm said.

 

Brazil soy exports rose to 2 million metric tonnes in October, compared to the 1.8 million tonnes exported in September, the Foreign Trade Ministry said. Volume was also higher than the 1.7 million tonnes exported in October 2006.

 

Daily export volume of soybeans was around 92,000 tonnes, and prices averaged US$328.00 per tonne, up from the US$299.30 per tonne price in September and the US$225.60 per tonne in October 2006, according to the trade ministry. Brazil is the No. 2 soy exporter behind the U.S.

 

 

SOY PRODUCTS

 

Soyoil was seen as the downside leader amid the drop in crude oil, said Mike Zuzolo, analyst with Risk Management Commodities. Soyoil prices had room to pull back after climbing to 33-year highs, traders said.

 

Soymeal crumbled under pressure from soyoil and fund selling, a floor trader said. Commodity funds sold an estimated 4,000 soymeal contracts and 1,000 soyoil contracts.

 

In soymeal pit trades, Fimat bought 1,000 December and sold 500 December, while Tenco bought 800 December and sold 300 March. In soyoil pit trades, RJ O'Brien sold 400 December and Iowa Grain sold 300 December.