December 21, 2005

 

CBOT Soy Review on Tuesday: Drifts lower; retreats from early highs

 

 

Soybean futures on the Chicago Board of Trade ended lower Tuesday, retreating from earlier gains on late position evening after speculative fund buying was exhausted down the stretch.

 

March soybeans finished 4 cents lower at US$6.16 1/2, March soymeal settled US$0.60 lower at US$198.60 a short tonne, while March soyoil ended 37 points lower at 21.54 cent a pound.

 

The exhaustion of speculative buying amid overbought conditions and weak market fundamentals set the stage for a modest pull back in prices, said a CBOT commission house broker.

 

Hedge related selling, generally favorable South American crop conditions made it tough to sustain earlier gains and without aggressive speculative buying in thin volume, selling from ABN Amro, Man Financial and Refco easily pulled prices into negative territory, floor traders said.

 

Soybean futures bolted to 3 1/2 month highs in early action, buoyed by follow through technical buying from Monday's strong close. However, the inability of the market to hold the gains generated weakness to gradually erode the advances until late selling firmly planted prices in negative territory heading toward the close.

 

Otherwise, futures experienced a relatively quiet session, with the rolling of January positions remaining a featured attraction.

 

Meanwhile, DTN Meteorlogix said, temperatures in Argentina are trending below normal, with conditions remaining mostly dry aside from some scattered rain. In southern Brazil, the small soybean-growing states of Parana and Rio Grande do Sul will be mostly dry until Friday. There might be a few showers Friday and into Saturday, which will help emerging soybeans.

 

In Mato Grosso and Mato Grosso do Sul, which are the two biggest soybean states in Brazil, there is a chance for scattered showers every day this week, with the best conditions developing Saturday, Meteorlogix added.

 

In pit trades, Cargill bought 600 March, Rand Financial bought 2,000 March, Goldenberg Hehmeyer bought 500 March, with ADM Investor Services and Iowa Grain each buying 300 March. ADM Investor Services, Term Commodities, Citigroup, ABN Amro and Man Financial each sold 500 March, Bunge Chicago and Iowa Grain were sellers as well.

 

South American soybean futures ended the day lower. The March futures finished 5 cents lower at US$6.42.

 

 

SOY PRODUCTS

 

Soymeal futures stumbled lower, grinding out modest losses after failing to hold onto early technically inspired gains. Futures initially raced to 4 month highs, with speculative funds adding to their net long positions, but once the buying eased at session highs, the market retreated lower in tune with the late turn around in soybeans, traders said.

 

Soyoil futures fell Tuesday, erasing the markets recovery bounce that produced two-week highs. The most active March futures ended with an outside lower day on technical charts, pressured by late speculative selling amid lingering worries over building domestic inventories.

 

March oil share slipped to 35.16%, and the March crush was at 53 3/4 cents.

 

In soymeal trades, Citigroup bought 900 March, Man Financial bought 700 March, JP Morgan bought 400 March, with Fimat and Prudential Financial each buying 300 March. Cargill sold 800 January and 600 March, Bunge Chicago sold 400 March and Fimat and Refco each sold 300 March. In spreads, RJ O'Brien spread 1,000 January/March and Bunge spread 1,000 March/January.

 

In soyoil trades, buying and selling was scattered among various commercial and commission houses. In spreads RJ O'Brien spread 2,600 January/March.