November 20, 2007

 

CBOT Soy Review on Monday: Stumbles lower; buying exhausted

 

 

Chicago Board of Trade soybean futures ended lower across the board Monday, backpedaling from contract highs set overnight on exhausted buying and weakness in outside inflationary markets.

 

January soybeans settled 7 1/4 cents lower at US$10.70 1/2 and March soybeans ended 6 1/2 cents lower at US$10.87 1/4. December soymeal settled US$4.60 lower at US$287.70 per short tonne. December soyoil finished 2 points lower at 44.80 cents per pound.

 

The inability of the market to find follow-through buying to challenge new highs set overnight, spillover weakness from outside markets for most of the day and general consolidation from recent highs opened the door for light selling pressure, analysts said.

 

A quiet news front aside from early China buying news left the market standing on shaky legs, with a retreat in outside markets encouraging participants to shed some length ahead of the Thanksgiving holiday, analysts said.

 

Nevertheless, the market remains in a bullish trend, with export demand and tightening supply outlooks underpinning prices. However, without a continuous stream of supportive influences to keep market bulls enthused, consolidation came into play, particularly in thin pre-holiday activity, a CBOT floor broker said.

 

The U.S. Department of Agriculture announced Monday private exporters reported new sales of 221,000 metric tonnes of U.S. soybeans to China for delivery in the 2007-08 marketing year.

 

The DTN Meteorlogix weather forecast said in Brazil's major soybean-growing areas, wet weather in Rio Grande do Sul and Parana in the south has disrupted planting and may force some replanting. Southern Brazil has some drier weather this week, with another significant rain event ahead during next weekend. In the north, Mato Grosso had rainfall of up to one inch during the past weekend. Generally favorable conditions for planting and development continue in Mato Grosso.

 

In pit trades, ADM Investor Services bought 500 January, and MF Global sold 400 January.

 

 

SOY PRODUCTS

 

Soy product futures ended lower Monday, influenced by weakness in outside markets and a lack of fresh supportive features, analysts said. Soyoil futures finished with light losses, stumbling down the stretch on light profit-taking from recent gains. Nearby futures set new contract highs in early trade. However, spillover pressure from choppy price action in crude oil failed to provide definitive strength to enable futures from withstanding late selling pressure that engulfed the soy complex, traders added.

 

Soymeal futures fell in unison with soybeans, consolidating prior gains in thin holiday trade, analysts said. The market also lost product share to soyoil on oil/meal spreading, traders added.

 

December oil share ended at 43.78% and the December/January crush ended at 55 1/4 cents.

 

In soymeal trades, Citigroup bought 300 December, and Fortis bought 400 March. JP Morgan sold 300 January, and Fimat and Penson GHCO each sold 300 December. Speculative funds were net sellers on the day.

 

In soyoil trades, buyers and sellers were scattered among various commission houses. Speculative funds were net buyers on the day.