November 8, 2007

 

CBOT Soy Review on Wednesday: Down on profit taking; crude oil volatility

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, trimming Tuesday's sharp gains on profit-taking pressure attributed to a lack of support from outside markets.

 

November soybeans settled 5 3/4 cents lower at US$10.23 3/4 and January soybeans ended 6 cents lower at US$10.38 1/2. December soymeal settled US$2.70 lower at US$281.90 per short tonne. December soyoil finished 2 points higher at 43.64 per pound.

 

The absence of a crutch from crude oil futures opened the door for the setback, as traders began to factor in the big risk associated with inflationary based gains if crude oil's price structure changes, said Dale Durchholz, analyst with Agrivisor in Bloomingtonne, Ill.

 

With crude oil nearing the psychological benchmark level of US$100 per barrel, a lot of volatility has surfaced, raising fears that the speculative rally may be ending, he added.

 

A quiet news front continues to keep attention on outside markets, and without any fresh fundamental news, technical and speculative profit taking emerged as featured attractions, analysts said.

 

Otherwise, few directives were presented to traders, with light position squaring ahead of Friday's crop reports aiding the defensive theme, traders added. Nevertheless, analysts say unless the reports provide some shocking news, price direction will continue to be derived from outside inflationary based market influences.

 

Futures initially spiked to new contract highs, but with volatility in crude oil sending prices retreating lower, soybeans easily backpedaled from their early gains.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release weekly export sales figures for the week ended Nov. 1 at 8:30 a.m. EST. Trade estimates put soybean export sales at 400,000 to 600,000 metric tonnes. Soymeal sales are projected in a range of 150,000 to 250,000 metric tonnes, with soyoil sales expected in a range from 5,000 to 15,000 tonnes.

 

USDA is scheduled to release its final crop production report of the year based on conditions as of Nov. 1, Friday. The average of analysts estimates from a Dow Jones Newswires survey peg U.S. soybean production at 2.606 billion bushels with a yield of 41.5 bushels an acre. The estimates are slightly above October USDA projections of 2.598 bushels with a yield of 41.4 bushels an acre. The average of estimates for the 2007-08 carryout is 213 million bushels, down slightly from the October USDA estimate of 215 million.

 

In pit trades, buyers and sellers were scattered among various commission houses, with Rand Financial a seller of 600 January and RJ O'Brien a seller of 300 January. Speculative fund selling was estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with profit-taking pressure reported in each market. Soymeal futures stumbled in unison with soybeans, as the absence of outside-market support uncovered speculative sales, analysts said.

 

Soyoil futures ended narrowly mixed, pulling back from new 33-year highs set initially. Spillover pressure from crude oil futures took the edge off prices, but with volatile price moves in crude oil, higher metal futures and record highs in Malaysian palm oil soyoil found some underpinning support to offset a midday sell-off, analysts said. Speculative selling in soymeal that produced oil/meal spreading helped limit pressure in soyoil as well, analysts added.

 

December oil share ended at 43.39% and the November/December crush ended at 76 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimates above 1,000 lots.

 

In soyoil trades, speculative funds were net buyers on the day. ADM Investor Services bought 300 January, Bunge Chicago bought 500 January, Tenco bought 300 January, Fimat bought 400 December, and Iowa Grain bought 400 January. Sellers were scattered among various commission houses.