December 21, 2006

 

CBOT Soy Review on Wednesday: Retreats on technically inspired sales

 

 

Chicago Board of Trade soybean futures ended lower Wednesday, retracing Tuesday's gains on technically inspired selling amid the absence of fresh supportive news to underpin prices.

 

January soybeans finished 5 1/4 cents lower at US$6.48 1/4, and March soybeans ended 5 1/4 cents higher at US$6.63 1/2. January soymeal settled US$0.80 lower at US$184.70 per short tonne, while January soyoil ended unchanged at 28.00 cents a pound.

 

A quiet news front kept technical factors in play, with futures retreating lower after early technical support was penetrated, said Mike Zuzolo, senior analyst with Risk Management Commodities in Lafayette, Ind.

 

The absence of a supportive push in thin holiday trade set futures on a downward course with South American hedge pressure and a bounce in the U.S. dollar firmly planting prices in negative territory, Zuzolo added.

 

The market quickly erased opening gains, after early interest was exhausted, and with South American weather not a concern at this point, and a lack of support from the soy products, futures failed to find underpinning strength, traders added.

 

Looking forward, the market is seen maintaining a range-bound affair heading into the holidays, unless technicals come into play to spark strong momentum in either direction, Zuzolo said.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said South America and crop weather is favorable due to timely rains and moderate temperatures. Southern Brazil had rains of up to two inches in northern Rio Grande do Sul and Parana on Tuesday. Additional moderate to heavy rains will occur Thursday and Friday. Mato Grosso will have thundershowers with up to one inch of rain over the next few days, and more showers during the coming weekend. Argentina's central crop belt had up to one and one-half inch of rain Tuesday; more showers with similar amounts are on track to develop during the weekend, Meteorlogix said.

 

On tap for Thursday, Census Bureau will release its November soy crush report 7 a.m. CST. The average of analysts estimates peg the crush at 154.8 million bushels, soyoil stocks at 3.026 billion pounds and soymeal stocks at 373,500 tonnes.

 

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 550,000- to 900,000-metric-tonne range. Soyoil sales are seen between 5,000 and 15,000 metric tonnes, with soymeal commitments seen in a range of 75,000 to 175,000 tonnes.

 

In pit trades, buyers were lightly scattered among various commission houses. UBS Securities sold 800 January and 1,000 March, Calyon Financial sold 500 January and 400 March, Citigroup sold 500 March and Fortis sold 500 January. Speculative fund selling was estimated at 4,000 contracts.

 

Day session volume on the e-CBOT platform was 29,259 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil gaining some product share in thin trade. Soyoil futures ended a two-sided session modestly higher, recovering from earlier declines on light technical buys and borrowed strength from higher crude oil futures, analysts say.

 

Soymeal futures ended lower across the board, pressured by weakness in soybeans and light soyoil/soymeal spreading.

 

January oil share ended at 43.10% and the January crush ended at 65 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with JP Morgan a featured buyer of 600 March.

 

In soyoil trades, buyers and sellers were widely scattered among commission houses. Prudential Financial bought 500 March, and JP Morgan bought 300 January. Calyon Financial sold 300 January.