December 3, 2009

 

CBOT Soy Review on Wednesday: Stumble on profit-taking; lack fresh support

 

 

Soy futures at the Chicago Board of Trade stumbled Wednesday, extending overnight weakness in the absence of fresh support to underpin prices.

 

CBOT January soy ended 25 1/2 cents lower at US$10.34, and March soy settled 25 cents lower at US$10.41.

 

In pit trades, speculative funds were estimated sellers of 6,000 lots in soy, 2,000 lots in soymeal, and 3,000 lots in soyoil.

 

A quiet news front provided little direction for prices, allowing the influence of a firmer U.S. dollar and lower crude oil futures to attract selling interest. Carryover selling from Tuesday's poor technical close surfaced to pressure prices as well.

 

The inability of the market to find follow-through buying once futures eclipsed chart resistance at August highs on Tuesday served as a signal that upside momentum had ran out of gas, said Mike Zuzolo, president Global Commodity Analytics and Consulting.

 

The market lacked any fresh support to justify lofty price levels, with traders leery of demand slowing on ideas end users have their demand needs covered through mid-January, analysts said. Commercial selling was featured in the market's slide as well.

 

Technical selling added to the defensive tonnee, with bearish traders encouraged by the January contract's ability to penetrate and settle below trendline support near the US$10.35 price level, Zuzolo added.

 

With demand needs covered, traders will eye South American weather and production risks for fundamental support for prices.

 

The DTN Meteorlogix weather forecast said Brazil has favorable to nearly ideal weather for early growth of soy at this time. The possible exception is in Rio Grande do Sul, where it is still very wet; however, conditions should slowly improve in this area with time. Meanwhile, Argentina's weather pattern looks drier during the next week to 10 days, Meteorlogix said.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EST on Thursday. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Nov. 26 to be in the range of 650,000 to 1 million metric tonnes. Soymeal export sales are seen between 150,000 and 200,000 tonnes, while soyoil sales are pegged between 10,000 and 40,000 tonnes.

 

 

Soy Products

 

Soy product futures tumbled Wednesday, consolidating prior gains on profit-taking pressure. Soyoil futures backpedaled with soy, but spillover weakness from crude oil and technical selling provided additional pressure to firmly plant futures in negative territory, analysts said.

 

Soymeal futures ended lower, succumbing to profit-taking pressure amid the absence of fresh supportive news.

 

December soymeal ended US$7.40 lower at US$317.30 per short tonne, while March soymeal settled at US$7.90 lower at US$305.50. December soyoil finished 83 points lower at 39.75 cents per pound, while March soyoil ended 81 points lower at 40.11.

 

January oil share was 39.69 while the January soy crush ended at 79 1/4 cents.