December 30, 2005

 

CBOT Soy Review on Thursday: Falls to 1.5-Wk lows on speculative sales

 

 

Soybean futures on the Chicago Board of Trade tumbled to 1 1/2-week lows Thursday, succumbing to speculative selling pressures down the stretch, traders said.

 

March soybeans finished 13 1/2 cents lower at US$6.08 3/4, March soymeal settled US$4.80 lower at US$197.80 a short tonne, and March soyoil ended 6 points lower at 21.16 cents a pound.

 

The lack of speculative fund support in the face of bearish fundamental pressures kicked the legs from beneath the market, with profit taking and long liquidation triggered as active contracts penetrated underlying technical support, said a CBOT commission house broker.

 

Midday weather models showing a wetter forecast for Argentina and southern Brazil took some edge off prices, sending market bulls running for cover. Speculative-led selling weighed on prices, as the absence of fresh supportive inputs failed to underpin recent technical gains. The evening of recently established long positions in the last full trading session of 2005 added to the quick descent in prices, traders said.

 

The lower theme was consistent for most of the day, with technically inspired selling sending prices backpedaling through previous lows. Reports of improving weather conditions in South America and ample U.S. inventories served as the fundamental catalysts to generate the price correction heading into the close.

 

Traders said private weather forecasters using the European weather model upgraded rain potential in Argentina for early next week and extended forecast were a bit wetter as well.

 

Otherwise, the rolling of January positions ahead of Friday's first notice day was a featured attraction until speculative selling dominated market attention, pit sources added.

 

Meanwhile, analysts surveyed by Dow Jones Newswires anticipate deliveries against the CBOT January soybean contract to fall in a range of 300 to 1,500 lots, with most analysts leaning toward a range of 300 to 700 lots. Soyoil delivery notices are expected in a range of 1,000 to 3,000 contracts, while soymeal deliveries are seen between zero and 200 lots.

 

Analysts surveyed by Dow Jones Newswires anticipate weekly U.S. soybean export sales for the week ended Dec. 22 to fall within a range of 550,000 to 750,000 metric tonnes. The USDA is scheduled to release its weekly sales report Friday at 8:30 a.m. EST. Soymeal commitments are expected to be in a range of 25,000 to 125,000 tonnes, and soyoil sales are seen in a range of zero to 15,000 tonnes.

 

In pit trades, Calyon Financial, Citigroup, Rand Financial, Refco and Tenco were featured sellers.

 

South American soybean futures stumbled lower. The March futures finished 16 cents lower at US$6.30.

 

 

SOY PRODUCTS

 

Soymeal futures fell in unison with soybeans, stumbling to one-week lows on a price correction from recent gains. Speculative selling pinned prices firmly in negative territory, with the absence of fund buying and profit taking weighing on prices.

 

Soyoil futures propelled to a three-session high on speculative buying, before late fund selling sent prices retreating. Speculative fund buying associated with the correction of soymeal/soyoil spreads kept prices firm for most of the day.

 

"There was a role reversal in the market, with funds buying soyoil and selling soymeal," said a CBOT commission house broker. The adjustment of spreads coupled with short covering served as the catalysts for the gains. However, the late collapse across the trading floor took its toll on prices with traders saying the barrage of selling enabled March soyoil to end out of line with other contracts. March oil share climbed to 34.85%, and the March crush was at 59 1/4 cents.

 

In soymeal trades, commission house selling was featured attraction, after buyers and sellers were scattered across various firms for most of the day.

 

In soyoil trades, Calyon Financial, Man Financial, O'Connor, Refco, and RJ O'Brien were featured buyers.