December 28, 2005

 

CBOT Soy Review on Tuesday: Retreats on technical sales

 

 

Chicago Board of Trade soybean futures ended Tuesday's session posting light declines, setting back from previous gains on technically motivated selling.

 

March soybeans finished 1 1/4 cents lower at US$6.23 3/4, March soymeal settled US$0.10 higher at US$203.50 a short tonne, while March soyoil ended 33 points lower at 21.28 cent a pound.

 

The defensive theme took shape from the outset, with technically motivated selling pressuring prices. Overbought market conditions combined with beneficial weekend rains in key Brazilian growing areas served as a spark to entice participants into taking some profits off the table, following the strong gains posted in recent weeks, traders said.

 

A quiet news front failed to provide any incentives for buyers to offset the declines for most of the day, with futures briefly descending to double-digit losses. This continued in light volume holiday session trade, until late position evening and spillover momentum from a late rebound in soymeal trimmed the losses. The unwillingness of traders to press the short side of the market ahead of anticipated index fund buying in January helped cut the losses as the well, analysts added.

 

DTN Meteorlogix Weather said the Christmas holiday weekend was a rainy event for much of Brazil's soybean country. As a result, soybean soil moisture is well-supplied heading into the end of the calendar year and the midpoint of the Brazil soybean crop season. Although the area is expected to stay dry for most of the week, southern Brazil (Rio Grande do Sul through Parana) will have a good chance at another three-tenths to one and one-half inch rains on Saturday through Monday, Meteorlogix said.

 

In Argentina, some dryness is occurring in the central corn and soybean belt. This dryness is not a major problem at the moment, but will bear monitoring for the possibility of crop stress development, Meteorlogix adds.

 

The U.S. Department of Agriculture said soybeans inspected for export in the week ended Dec. 22 totaled 21.535 million bushels. Analysts expected soybean inspections in a range of 18 million to 26 million bushels.

 

In pit trades, Calyon Financial bought 700 March, Refco and UBS Securities each bought 500 March, and Rand Financial bought 300 March. Bunge Chicago sold 300 March, Calyon Financial, Rand Financial and Refco each sold 500 March.

 

South American soybean futures ended lower. The March futures finished 1 cent lower at US$6.48.

 

 

SOY PRODUCTS

 

Soymeal futures ended marginally higher, managing to recoup their early declines on a late dose of local and speculative buying. End of the day position evening coupled with meal/oil spreading amid weakness in soyoil managed to keep prices underpinned in thin trade, floor sources said.

 

Soyoil futures stumbled to a two-week low, pressured by ample inventories and bearish technical outlooks. A net large speculative trader short position in the market coupled with weakness in soybeans helped keep sellers in control of price direction. However, good commercial buying managed to limit declines, with the rolling of January positions ahead of first notice day were featured attractions.

 

March oil share dropped to 34.33%, and the March crush was at 58 cents.

 

In soymeal trades, Bunge Chicago, Man Financial and Rand Financial were key buyers, with RIS Div of Man Financial a featured seller.

 

In soyoil trades, ADM Investor Services bought 300 March, Bunge Chicago bought 600 March, Cargill bought 400 March, with additional buying scattered among various commission houses. On the sell side, Calyon Financial sold 400 March, Refco sold 300 March, Fimat and RJ O'Brien each sold 500 March and Man Financial sold 600 March. Commodity fund selling was estimated at 1,700 contracts. In spreads, Calyon Financial spread 1,200 January/March.