December 19, 2006

 

CBOT Soy Review on Monday: Lower on speculative sales, technical weakness

 

 

Chicago Board of Trade soybean futures stumbled lower Monday, pressured by end of the year speculative profit taking and bearish technical momentum, analysts said.

 

January soybeans finished 9 1/2 cents lower at US$6.48, and March soybeans ended 9 1/4 cents lower at US$6.63. January soymeal settled US$1.80 lower at US$184.90 per short tonne, while January soyoil ended 44 points lower at 27.71 cents a pound.

 

The rush of participants to cash in profits at year end set the stage for the losses, with the ability of futures to move below major moving average support uncovered selling interest to firmly plant prices in negative territory, said John Kleist of Top Third Ag Marketing in Chicago.

 

Speculative led selling fueled the drop in prices, with bearish South American weather, weak cash prices at the gulf and large funds carrying larger than expected length into the holidays attracted liquidation pressure, traders added.

 

The theme was consistent, aside from a late round of position evening that surfaced to declines down the stretch, a trader added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said a notable weather improvement is in store for southern Brazil this week, with thunderstorms covering much of Rio Grande do Sul with up to 1 1/2 inch rainfall this week. Lighter rains will occur in Parana. The rains will be accompanied by cooler temperatures and an easing of crop stress in the region, Meteorlogix reports.

 

Argentina had heavy rain storms with up to 3 inches of precipitation during the weekend in Cordoba, northern Buenos Aires and southern Santa Fe. Drier and hotter weather will develop this week, but the overall effect of the past weekend's rain was generally beneficial, and will allow crops to continue developing well, Meteorlogix added.

 

In pit trades, Term Commodities bought 1,200 March, JP Morgan bought 400 November. UBS Securities sold 1,000 January, 1,000 March and 1,000 May, Man Financial sold 1,000 January and 400 March. Rand Financial sold 400 January and Shatkin/Arbor sold 500 January. Speculative fund selling was estimated at 6,000 contracts.

 

Day session volume on the e-CBOT platform was 41,603 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, succumbing to speculative liquidation selling heading toward the holidays, analysts said. Soyoil futures carved out 6-week lows, pressured by speculative sales, with borrowed weakness energy futures and technical pressure keeping a defensive tonnee in the market, analysts said. The ability of the nearby January futures to penetrate major moving average support, opened the door for the losses, with light soyoil/soymeal spread unwinding aiding the losses as well, traders added. Meanwhile, solid underlying commercial buying provided support to limit losses in otherwise thin trade, a trader said.

 

Soymeal futures ended down, gapping lower on technical charts. Futures were on the defensive from technical pressures, spillover from soybeans and overall broad base weakness in commodities, analysts said.

 

January oil share ended at 42.84% and the January crush ended at 63 1/2 cents.

 

In soymeal trades, Bunge Chicago bought 200 March, Fimat and JP Morgan each bought 400 March. Fortis sold 500 January, and Fimat sold 400 March. Speculative funds were estimated net sellers on the day.

 

In soyoil trades, Fimat bought 1,400 January, Citigroup and Prudential Financial each bought 600 January, with ADM Investor Services, Bunge Chicago and UBS Securities each buying 300 January. UBS Securities sold 1,500 March and 500 May, ADM Investor Services sold 500 March, Man Financial sold 700 January and 500 March. Rand Financial sold 500 January and Bunge Chicago sold 300 March. Commercial firms were estimated buyers of 4,500 contracts with speculative funds estimated sellers of 6,000 contracts.