December 29, 2007

 

CBOT Soy Review on Friday: Settles down amid late profit-taking

 

 

Chicago Board of Trade soybean futures ended lower Friday as late profit-taking and expectations of fund-rebalancing weighed on the market.

 

January soybeans closed down 4 3/4 cents at US$12.07 3/4, and March soybeans closed 8 1/2 cents lower at US$12.23. March soymeal fell US$10.40 to US$333.50 a short tonne, and March soyoil rose 30 points to 49.67 cents a pound.

 

Heavy late profit-taking dragged down soybean prices as traders took money off the table going into the end of the year and the end of the month, an analyst said.

 

"They're taking some profits," the analyst said. "They took profits off yesterday's high, too."

 

There was a sharp disparity between the prices of soybean and soymeal futures in the pit and on the screen at the close. Late electronic selling appears to have driven the electronic prices sharply lower, with the impact of the sales exacerbated by relatively thin holiday volume, an analyst said.

 

Market participants questioned trades in multiple months of soybeans, mini-sized soybeans and soymeal, but the exchange ruled they would stand.

 

"All the trades stood. There are no regulatory issues," said Mary Haffenberg, spokeswoman for the CME Group, which owns the CBOT. "We didn't get any calls of fat fingers. There's no trade to bust."

 

There was also some pressure from sentiment the market is headed for index fund rebalancing that is expected to occur shortly after the new year, a CBOT floor analyst said. Funds will have to sell 32,000-36,000 contracts of wheat and soybeans and secure 19,000-21,000 contracts of corn, AgResource Company said.

 

The late pullback came after prices rose in early trading. The market stayed in positive territory for most of the day session amid spillover support from firmer crude oil and metals, traders said.

 

The soy complex also got a boost from a new record in Malaysian palm oil overnight, according to traders. The benchmark March palm oil contract gained MYR28 to MYR3,125 a metric tonne after reaching an intraday high of MYR3,141/tonne, a record. Bullish sentiment and adverse weather in palm oil-growing regions are supporting palm oil prices.

 

Despite the setback, the soybean market will continue to trend higher on technical and fundamental strength, an analyst said.

 

The first notice day for January contracts is Monday. Deliveries against the January soybean contract are expected to be fairly modest as high prices and uncertainty surrounding the government's January crop report may convince people to hold onto their supplies, analysts said Friday.

 

Deliveries are seen as zero to 1,000 lots, analysts said. The first notice day is the first day on which notices of intention to deliver actual commodities against futures market positions can be received.

 

 

SOY PRODUCTS

 

CBOT soy product futures finished mixed, with meal dropping along with soybeans on profit-taking, a floor trader said. Soyoil rose following the gains in Malaysian palm oil and amid the strength in outside markets, he said.

 

Deliveries against the CBOT January soyoil contract on the first notice day are largely expected to be 1,000 to 3,000 lots, analysts and traders said. Deliveries against the January soymeal contract are pegged at zero to 400 lots.