December 14, 2006

 

CBOT Soy Review on Wednesday: Lower on speculative sales; lacks supportive news

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, pressured by speculative led selling in the absence of fresh supportive news.

 

January soybeans finished 2 cents lower at US$6.61, and March soybeans ended 2 1/2 cents lower at US$6.76. January soymeal settled US$1.20 lower at US$188.70 per short tonne, while January soyoil ended 13 points lower at 28.56 cents a pound.

 

The combination of favorable weather outlooks for South American crops, the inability of futures to sustain upside momentum and slowing export demand at the Gulf served as catalysts to encourage funds to reduce some positions, said Dan Basse, president AgResource Co in Chicago.

 

A lack of fresh news to attract buyers coupled with carryover selling from Tuesday's weak technical close laid the ground work for the lower theme, traders added. In the absence of fresh demand or speculative fund buying, prices were poised to grind lower as futures settle into holiday mode, analysts add.

 

Nevertheless, futures did find underlying support at the low end of the recent trading range, with buyers surfacing to trim declines amid the January futures' inability to challenge support at Monday's low, a CBOT floor analyst said.

 

Meanwhile, the pattern thus far in December has been much drier in southern Brazil, but forecast models have been consistent to suggest that southern Brazil will shift to a much wetter pattern next week, Earth Satellite's Cropcast said in a midday outlook. This is providing confidence that rains will rise to moderate and high levels. The six- to 10-day forecast has consistently suggested an absolute minimum of 2 inches of rainfall in Rio Grande do Sul next week, and Wednesday's solutions are leaning more strongly in the direction of up to 4 inches or more, Cropcast said in the forecast.

 

On tap for Thursday, the National Oilseed Processors Association November crush report is scheduled for release 7:30 a.m. CST. Analysts surveyed by Dow Jones Newswires expect the crush figure to drop to about 150.8 million bushels, down from the previous report's 154.984 million. Estimates for the report ranged from as low as 147.9 million bushels to as high as 153.3 million bushels.

 

NOPA soyoil stocks in November are expected to hold steady near 2.630 billion pounds, unchanged from the 2.630 billion pounds in October. Estimates ranged from as low as 2.600 billion pounds to as high as 2.650 billion pounds.

 

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 1,000,000-metric-tonne range. Soyoil sales are seen between 5,000 and 20,000 metric tonnes, with soymeal commitments seen in a range of 75,000 to 175,000 tonnes.

 

In pit trades, Fortis bought 400 January, RJ O'Brien, Rand Financial and JP Morgan were moderate buyers as well. Man Financial sold 1,200 March and 500 January, JP Morgan sold 600 January, Calyon Financial sold 500 January and Rosenthal sold 400 January. Speculative funds were estimated sellers of between 3,000 and 4,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ground lower in unison with soybeans. Soyoil futures carved out four-week lows on technical selling, before the exhaustion of sales pressure allowed futures to stabilize with soybeans, analysts said. Underlying commercial buying helped stem the tide of the losses as well, traders added.

 

Soymeal futures ended lower on technically motivated selling. The market's ability to breach support at the January contract's 50-day moving average - US$187.80 kept sellers enthused for most of the day, traders said. However, soymeal's inability to press below Monday's low in the January future coupled with a bounce off lows in soybeans uncovered buying to trim declines, analysts added.

 

January oil share ended at 43.08% and the January crush ended at 68 1/4 cents.

 

In soymeal trades, buyers were lightly scattered among various commission houses. Bunge Chicago, Iowa Grain, Man Financial and JP Morgan were each sellers of 300 January. Speculative funds were net sellers on the day.

 

In soyoil trades, Bunge Chicago, Citigroup, and Fimat each bought 300 January, with JP Morgan a buyer of 300 March. JP Morgan sold 700 March.