December 29, 2005

 

CBOT Soy Review on Wednesday: Grinds lower; consolidates in thin trade

 

 

Chicago Board of Trade soybean futures finished Wednesday's trading session at modestly lower levels, quietly consolidating previous gains in thin holiday trade, analysts said.

 

March soybeans finished 1 1/2 cent lower at US$6.22 1/4, March soymeal settled US$0.90 lower at US$202.60 a short tonne, while March soyoil ended 6 points lower at 21.22 cent a pound.

 

"The soybean market merrily consolidated under recent swing highs," said John Kleist of Kleist Agricultural Consulting.

 

Overbought market conditions and bearish fundamentals put futures in a defensive posture amid the absence of strong speculative buying. Otherwise, the rolling and liquidating of January contracts were featured attractions, as participants positioned themselves ahead of Friday's first notice day.

 

Overall activity was fairly quiet, with futures escaping the choppy two-sided activity that plagued the market in early action, with prices settling into a trading range amid the absence of fresh market moving inputs.

 

The absence of something fundamental coming along to justify higher price movement and the lack of a serious threat to South American crops has managed to take the edge off prices, said Kleist. The inability of March futures to challenge resistance at its 200-day moving average has stalled the technical rally, showing that the fundamental outlook hasn't changed, he added.

 

DTN Meteorlogix Weather said Brazil's soybean areas have a mostly favorable crop weather pattern. However, Argentina's central corn and soybean belt has above-normal temperatures and dry weather ahead during the next week, which is causing some stress to crops.

 

The DTN Meteorlogix forecast for Argentina's main soybean provinces of Buenos Aires, Santa Fe and Cordoba, calls for only a few light showers today, followed by mainly dry weather Thursday and Friday. The weekend will bring only scattered showers once again. Temperatures will be above normal, meaning highs in the range of 85-95 degrees Fahrenheit.

 

In pit trades, ABN Amro bought 300 March, Refco and Tenco each bought 500 March. Iowa Grain sold 300 January, with Fimat and RIS Div of Man Financial featured sellers.

 

South American soybean futures ended lower. The March futures finished 2 cents lower at US$6.46.

 

 

SOY PRODUCTS

 

Soymeal futures quietly consolidated in step with soybeans, with the most active March future trading an inside day on technical charts. The sideways theme was consistent from the outset, as overbought market conditions and the absence of fresh news failed to attract the speculative interest that buoyed prices in prior sessions, traders said.

 

Soyoil futures ended lower across the board, setting a new low for the current move. Technical selling was a feature with declines accelerating once the active March futures penetrated support in the 21.24 area. The March contract sank to its lowest level since February, before a lack of follow through selling enabled futures recoup some its losses. Adding to the bearish theme are lingering concerns over building inventories.

 

March oil share ended at 34.37%, and the March crush was at 57 cents.

 

In soymeal trades, RJ O'Brien bought 600 March and Cargill bought 200 March. Calyon Financial, Tenco and Citigroup each sold 200 March and RIS Div of Man Financial sold 200 January. Cargill spread 800 January/March.

 

In soyoil trades, Bunge Chicago, Term Commodities, and Calyon Financial each bought 300 March, Cargill and Citigroup each bought 400 March. Fimat sold 500 March Refco and Tenco each sold 400 March, Man Financial sold 300 March. Commodity funds were net sellers on the day. Prudential Financial spread 500 January/May and Iowa Grain spread 400 March/January.