December 7, 2006

 

CBOT Soy Review on Wednesday: Settles down on profit taking; spillover

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, backpedaling to over two-week lows on profit-taking pressure and spillover weakness from outside markets.

 

January soybeans finished 10 cents lower at US$6.54 1/4, and March soybeans ended 9 1/2 cents lower at US$6.68 1/4. January soymeal settled US$1.00 lower at US$186.80 per short tonne, while January soyoil ended 56 points lower at 28.78 cents a pound.

 

Futures settled back into a corrective phase, with end-of-the year profit taking a feature, analysts said.

 

Bearish South American crop conditions, technical pressures and the defensive influence of lower grain, soyoil and outside markets kept sellers in command, analysts said.

 

The lower theme was consistent from the outset, as carryover selling from lower overnight action set the tonnee for the market. This was consistent, but underlying commercial buying and optimistic long-range demand outlooks managed to limit losses in relative quiet trade, traders added.

 

Looking ahead, choppy, volatile market activity may be the norm heading into the holidays, as participants look to square positions at year end while keeping a close eye on South American crop conditions, a CBOT floor analyst said.

 

The DTN Meteorlogix weather forecast said in the primary South American crop areas, the weather trends remain mostly favorable for crop development. Southern Brazil will have showers across Parana through the weekend. Lighter rains are in store for Rio Grande do Sul. Temperatures will be normal to above normal, but not extremely hot. In Mato Grosso (northern Brazil soybean belt), showers are in store for the next five years, with up to one inch of rain by the end of the week. This is a favorable situation for soybeans.

 

Argentina had showers in the west and north Tuesday, with cool temperatures. Mostly dry weather will be in store through Thursday, with showers Friday, and mostly dry conditions during the coming weekend. Argentina has had some notable rains recently; thus, the corn and soybean situation is suitable for good crop growth at this time, Meteorlogix reports.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release weekly export sales reports 7:30 a.m. CST. Analysts surveyed by Dow Jones Newswires estimate soybean commitments in the 600,000- to 800,000-metric-tonne range. Soyoil sales are seen between 30,000 and 40,000 metric tonnes, with soymeal commitments seen in a range of 125,000 to 175,000 tonnes.

 

In pit trades, Goldenberg Hehmeyer bought 1,000 November, Term Commodities bought 500 January, Fimat bought 500 November and Rand Financial bought 300 January. On the sell side, UBS Securities, Man Financial and DT Trading each sold 300 January, with JP Morgan a seller of 300 March.

 

Day session volume on the e-CBOT platform was 33,380 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended lower across the board, with a profit taking correction in soyoil the downside leader. Soyoil futures ended firmly planted in negative territory, with active contracts slipping near three-week lows. The market was pressured by a profit-taking correction, with the recirculation of large deliveries offsetting supportive long-range demand prospects, analysts said.

 

Soymeal futures ended a two-sided session lower, succumbing to spillover pressure from soybeans, traders said. End-of-the year consolidation aided the lower tonnee, but futures did manage to gain some products share on the unwinding of soyoil and soymeal spreads, traders added.

 

January oil share ended at 43.53% and the January crush ended at 73 1/2 cents.

 

In soymeal trades, buyers and seller were scattered across various commission houses, with Tenco buying 600 March, Man Financial selling 500 March and Rand Financial selling 200 March.

 

In soyoil trades, JP Morgan bought 800 January, Man Financial and Rosenthal each bought 300 January, Rand Financial bought 500 March and Citigroup bought 400 March. Active selling was widely scattered among numerous commission houses, with Shatkin/Arbor, JP Morgan, Bunge Chicago and ADM Investor Services featured sellers.