December 28, 2007

 

CBOT Soy Review on Thursday: Slides on profit-taking pullback

 

 

Chicago Board of Trade soybean futures closed lower Thursday on profit-taking as the market took a step back following recent rallies, traders and analysts said.

 

Jan soybeans closed down 8 1/4 cents at US$12.12 1/2, and March soybeans fell eight cents to US$12.31 1/2.

 

Traders took money off the table heading into the end of the month and the year, said Dave Marshall, an independent broker and commodity advisor. However, the market still has technical and fundamental strength after hitting 34-year highs in a string of recent sessions, he said.

 

"We probably needed to correct and bank some of these recent profits," Marshall said. "It certainly hasn't changed the trend."

 

Joe Victor, vice president of marketing for Allendale, agreed soybeans were still technically and fundamentally strong. Soybeans will continue to battle with corn and spring wheat to secure acreage in the U.S. next spring, he said.

 

There was some scattered market chatter that the assassination of former Pakistani Prime Minister Benazir Bhutto underpinned the market as the killing created uncertain global political conditions. The event was boosted crude oil and gold, which may have indirectly provided some spillover strength to the grains and soybeans, an analyst said.

 

But soybeans would have slumped with or without the assassination, Marshall said.

 

"I think it's a talking factor," he said about Bhutto's death. "I don't think it's actually an indicator in the change in demand."

 

Aggressive buying from China, in particular, has helped propel soybean futures to lofty price levels. The U.S. Department of Agriculture on Friday will release its weekly export sales report, and analysts expect soybean sales of 500,000 to 900,000 metric tonnes.

 

There are also lingering concerns about production in South America, a trader said. Long-range weather charts predict hot, dry weather will hit Argentina's central crop belt next week, especially western and northern areas, according to DTN Meteorlogix.

 

"Pollinating corn and flowering soybeans may be stressed by this drier and very-warm-to-hot trend," Meteorlogix said.

 

However, the upper-atmosphere pattern that promises drier conditions in Argentina is setting the stage for continued showers in Brazil's central and northern soybean belt during the start of 2008. Mato Grosso and Parana provinces, Brazil's top two soybean-growing states, are in line for the showers, and should see generally beneficial soybean conditions, Meteorlogix said.

 

Commodity funds sold an estimated 3,000 contracts at the CBOT. In pit trades, Fimat and UBS each bought 300 March, while RJ O'Brien sold 300 March.

 

FC Stonnee spread 900 January/March, and Bunge spread 500 January March. Fortis spread 700 May/July.

 

 

SOY PRODUCTS

 

CBOT soy product futures fell on profit-taking and in a setback from gains Wednesday, traders said. Weakness in soybeans also weighed on soymeal and soyoil, but climbing crude oil and gold futures helped underpin the complex, they said.

 

Soyoil futures tried to push higher in early trading but then slumped along with soybeans. The soyoil market is not too far from its all-time high of 51 cents, set on Oct. 1, 1974, an analyst said.

 

Commodity funds sold an estimated 1,000 soymeal contracts and 2,000 soyoil contracts. In pit trades, Bunge bought 400 March soymeal, while JP Morgan, Fimat and RJ O'Brien each bought 200 March soyoil.