November 26, 2005

 

CBOT Soy Review on Friday: Spec sales extend downtrend

 

 

Soybean futures on the Chicago Board of Trade ended a shortened trading session lower Friday, sliding to a new low for the current move on speculative sales attributed to bearish fundamental and technical outlooks.

 

January soybeans finished 7 3/4 cents lower at US$5.54 1/4, December soymeal settled US$0.60 lower at US$170.10 a short tonne, and December soyoil ended 50 points lower at 21.63 cent a pound.

 

The defensive theme was consistent from the outset, with carryover selling from Wednesday's technical selloff kick-starting the losses, as lackluster weekly export sales and the absence of supportive features kept bearish momentum flowing, said a CBOT commission house broker.

 

Favorable South American crop conditions and lingering concerns over bird flu in Asia added pressure as well. On the demand side, marketing year low weekly export sales cast a defensive cloud over the market, with China's absence from the weekly commitments showing how dependent the U.S. is on demand from the country, a floor traded added.

 

The U.S. Department of Agriculture said Friday that 2005-06 marketing year sales in the week ended Nov. 17 totaled 219,500 tonnes, a marketing year low. Pre-report estimates ranged from 500,000 to 700,000 tonnes.

 

Nevertheless, technical weakness was a key driver of prices, with the ability of January futures to penetrate underlying support at US$5.54 1/2 - the fall low on continuation charts - accelerating declines. January futures, aside from taking out the market's fall low, slid to its lowest level since Feb. 16.

 

DTN Meteorlogix Weather Service said Brazil's main soybean belt had widespread rainfall of from one half to two inches during the past 48 hours. In Mato Grosso, another round of up to 1 1/2-inch rainfall is in store Friday through Saturday. More scattered showers will occur next week as well.

 

Argentina's soybean belt has generally dry weather in store during the next three days, but showers are again in the outlook going into the middle part of next week. In general, Argentina has favorable crop weather for its corn and soybeans, Meteorlogix added.

 

In news, farmers in Argentina had planted 56% of the 2005-06 soybean crop by Thursday, the Agriculture Secretariat said Friday. That puts the planting pace up from 46% a week ago and down only a hair from 57% a year ago, even though area is up more than a million hectares from last season.

 

In pit trades, Bunge Chicago was a key buyer. Calyon Financial and Citigroup each sold 300 January, Fimat sold 400 January and Man Financial sold 500 March. Commodity fund selling was estimated near 2,000 contracts

 

South American soybean futures ended lower across the board. The March futures settled 6 1/2 cents lower at US$5.89.

 

 

SOY PRODUCTS

 

Soymeal futures ended lower, dropping to a one-month low on early speculative sales. Concerns over the spread of bird flu in Asia and its impact on crushing and feed demand in the region applied fundamental pressure.

 

However, futures remained the strongest link in the complex, gaining product share, with higher-than-expected weekly export sales providing support.

 

Soyoil futures stumbled to a new nine-month low, pressured by speculative sales, as growing inventories amid high oil content and a record crush pace continued to keep the downtrend intact, traders said. Meanwhile, higher-than- anticipated weekly export sales and underlying commercial buying provided light price support.

 

December oil share dropped to 38.31%, and the December/January crush was at 52 1/2 cents.

 

In soymeal trades, Cargill bought 200 December and 200 January. RJ O'Brien sold 400 January, Calyon Financial and Refco Investor Services each sold 200 December. Commodity fund selling was estimated at 1,000 lots

 

In soyoil trades, Bunge Chicago bought 200 December and 400 January, ABN Amro bought 500 January, and Fimat and Prudential Financial each bought 200 March. ADM Investor Services sold 600 January, Calyon Financial and Fimat each sold 400 January, and Tenco sold 300 January and 500 March. Commercial firms were net buyers and speculative funds were net sellers.