December 5, 2006

 

CBOT Soy Review on Monday: Retreats; corrects on speculative profit taking

 

 

Chicago Board of Trade soybean futures ended sharply lower Monday, carving out double-digit losses in consolidative trade.

 

January soybeans finished 17 3/4 cents lower at US$6.59 1/4, and March soybeans ended 18 1/2 cents lower at US$6.73 1/2. January soymeal settled US$4.70 lower at US$185.70 per short tonne, while January soyoil ended 33 points lower at 29.34 cents a pound.

 

The market experienced an overdue correction from last week's climb to new contract highs, with spillover pressure from corn futures and technical pressure combining to attract profit-taking interest, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

The defensive theme was consistent from the outset, with carryover selling from Friday's technical weakness and the absence of fresh supportive news encouraging participants to book some early year-end profits, a CBOT floor analyst said.

 

Large traditional funds took the opportunity to take some profits, looking to lock in winnings before thinly traded end of the year markets could exaggerate losses, Kleist said. Meanwhile, bearish South American weather conditions and a commitment of traders report showing ownership starting to roll provided further signals to lure funds into securing some year-end profits, Kleist added.

 

The DTN Meteorlogix weather forecast said South America crop areas continue to have favorable weather conditions. Mato Grosso, Brazil, had up to two inches of rain during the weekend. Showers will move south into Mato Grosso do Sul on Monday and Tuesday, giving this sector of northern Brazil a good chance at showers. In southern Brazil, Parana had showers on Saturday and Sunday. Rio Grande do Sul was mainly very warm and dry. This week, however, brings showers and thunderstorms with up to one and one-half inch rainfall to the region by the end of the week, Meteorlogix forecasts.

 

In Argentina, widespread thunderstorms brought one and one-half inch rainfall to the major corn and soybean belt during the past weekend. Additional showers are in store during the first part of this week. Soybeans in South America row crop areas are, as a result, having a favorable weather pattern to start out December, Meteorlogix said.

 

In pit trades, Term Commodities bought 1,000 January, UBS Securities bought 700 January and Rand Financial bought 500 January. Calyon Financial sold 1,500 January, UBS Securities and Fimat each sold 500 January, with Citigroup, Man Financial and Rand Financial each selling 300 January. Speculative funds were estimated sellers of 1,500 contracts.

 

Day session volume on the e-CBOT platform was 41,546 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, backpedaling on corrective sales in unison with soybeans. Soymeal futures gapped lower on technical charts, stumbling to six-week lows. Spillover pressure from soybeans, technical weakness and a lack of fresh supportive news enabled futures to extend their recent corrective measures, traders said.

 

Soyoil futures traded defensively throughout the day, consolidating from prior highs. Speculative-led profit taking was a featured attraction, with spillover pressure from outside markets aiding the lower tonnee, analysts added.

 

January oil share ended at 44.13% and the January crush ended at 72 cents.

 

In soymeal trades, buyers were lightly scattered among various commission houses. UBS Securities sold 1,000 January, Iowa Grain sold 700 January, Fimat sold 400 March, and Man Financial sold 300 January and 300 March. Speculative fund selling was estimated at 3,000 contracts.

 

In soyoil trades, buyers were scattered among various commission houses, with Bunge Chicago buying 500 January and 300 March. Sellers were widely scattered among various houses, with speculative funds estimated net sellers on the day.