November 17, 2006

 

CBOT Soy Review on Thursday: End lower on speculative sales, exhausted buying

 

 

Chicago Board of Trade soybean futures stumbled lower for the second consecutive day on speculative selling Thursday, as the exhaustion of buying interest attracted profit-taking pressure.

 

January soybeans finished 7 1/4 cents lower at US$6.56 1/2, and March soybeans ended 7 1/4 cents lower at US$6.68 3/4. December soymeal settled US$2.50 lower at US$190 per short tonne, while December soyoil ended 6 points lower at 28.33 cents a pound.

 

The combination of broad-based commodity weakness and technical pressures set the stage for the declines, as the market backpedaled out of its recent 2-week trading range, analysts said.

 

Speculative selling was featured after upside movement faltered, with a retreat in corn and crude-oil futures prices leaving little incentive for upside moves in the face of ample nearby supplies, traders added.

 

A quiet news front kept speculative fund activity dictating price direction. Once the most active January contract penetrated support at last week's low and the contract's 20-day moving average, pre-placed sell orders emerged to firmly plant prices in negative territory, a CBOT floor analyst said.

 

Otherwise, fresh news remained light, but with most of the market's recent gains related to corn strength, once corn eased lower profit-taking pressure quickly surfaced, he added.

 

Meanwhile, ahead of the open U.S. Department of Agriculture said net weekly export sales for soybeans were 755,700 tonnes, 7% higher than the previous week and 6% above the prior the 4-week average.

 

In pit trades, speculative funds were net sellers on the day. RJ O'Brien and JP Morgan each sold 400 January, Man Financial sold 500 January, and Fimat and Kottke each sold 300 January. Buyers were lightly scattered among various commission houses.

 

 

SOY PRODUCTS

 

Soy product futures ended lower in step with declines in soybeans. Soyoil futures settled lower, easing back from earlier gains on speculative sales. The inability of the market to challenge Wednesday's highs, weakness in crude-oil futures and the subsequent setback on CBOT agriculture futures prices set the stage for the declines, analysts said. Nevertheless, futures managed to gain some product share versus soymeal, as long range demand prospects and higher-than-expected weekly export sales generated underlying support, analysts added.

 

Soymeal futures ended lower across the board, undermined by local and speculative selling as well as weakness in soybeans. Technical pressure added to the declines, with losses accelerated once active futures stumbled below underlying chart support, traders said.

 

December oil share ended at 42.71% and the December/January crush ended at 73 1/4 cents.

 

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

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with Fimat futures a featured seller.