November 19, 2005

 

CBOT Soy Review on Friday: Drops on fundamental, tech pressure

 

 

Soybean futures at the Chicago Board of Trade ended lower Friday, firmly planted in negative territory, with technical weakness and bearish underlying fundamentals keeping buyers on the run.

 

January soybeans finished 9 1/2 cents lower at US$5.69 3/4, December soymeal settled US$2.60 lower at US$172.20 a short tonne, and December soyoil ended 15 points lower at 22.01 cent a pound. For the week, January soybeans were down 31 3/4 cents, December soymeal dropped US$9.50, and December soyoil lost 73 points.

 

The market extended the week's defensive stance, sliding to its lowest level since Oct. 10, with the ability of futures to penetrate technical support and a lack of supportive features attracting speculative sellers, analysts said.

 

The theme was consistent from the outset with technically inspired selling sending prices backpedaling through previous lows. Reports of improving crop conditions in South America, ample U.S. inventories, a lagging export pace and demand worries attributed to bird flu outbreaks in Asia served as fundamental sparks to keep prices trending lower.

 

Firm cash basis levels amid a lack of country movement remains an underlying supportive feature, but in the face of overall poor fundamental and technical outlooks, buyers were unwilling to fight speculative selling pressure, said a CBOT commission house broker.

 

Meanwhile, the DTN Meteorlogix forecast calls for some very beneficial rainfall to develop in Mato Grosso, Brazil. Several weather systems offer the potential for up to 3 inches total rainfall in Mato Grosso by the end of next week. Rio Grande do Sul and Parana, in southern Brazil, will have only light precipitation over the next five to seven days.

 

Argentina's corn and soybean belt has favorable crop weather, with alternating periods of showers and dryness - ideal for the early-season corn and soybean development, Meteorlogix said.

 

In pit trades, ADM Investor Services and O'Connor each bought 300 January, and Bunge Chicago and Rand Financial each bought 500 January. FCStonnee, Man Financial, ABN Amro and Refco each sold 300 January, Calyon Financial sold 600 January, RJ O'Brien sold 800 January and UBS Securities sold 1,200 January.

 

South American soybean futures ended lower. The March futures settled 5 cents lower at US$6.03.

 

 

SOY PRODUCTS

 

Soymeal futures ended down, following soybeans with prices sliding to a new low for the month. Commercial and technical selling were featured attractions.

 

Soyoil futures fell to two-month lows for the nearby contract, and the lowest level for the December 2005 future since March. The market was pressured by large stocks and technical weakness, but did manage to gains some product share at the expense of soymeal.

 

December oil share ended at 38.99%, and the December/January crush was at 51 1/4 cents.

 

In soymeal trades, ADM Investor Services bought 300 December and 300 January, Cargill bought 300 January and Iowa Grain bought 200 December. Refco Investor Services, Fimat, Rand Financial, Shatkin Arbor and JP Morgan were featured sellers. Commodity fund selling was estimated at 1,000 lots.

 

In soyoil trades, ADM Investor Services, Bunge Chicago, Cargill Citigroup, Fimat, Rand Financial and Rosenthal were featured buyers. Refco Investor Services, Fimat, Goldenberg Hehmeyer, and Prudential Financial were key sellers on the day. Net fund selling was pegged at 1,000 contracts.