January 11, 2008

 

CBOT Soy Review on Thursday: Lower; speculative sales, pre-crop report positioning

 

 

Chicago Board of Trade soybean futures ended lower Thursday, setting back heading into the close on speculative selling and pre-crop report position squaring, analysts said.

 

January soybeans settled 5 cents lower at US$12.44 and March soybeans ended 2 1/4 cents lower at US$12.60 1/4. March soymeal settled US$0.20 lower at US$348.20 per short tonne. March soyoil finished 19 points higher at 51.27 cents per pound.

 

The market experienced two-sided consolidative trade, with position squaring ahead of Friday's U.S. Department of Agriculture crop reports a featured attraction, analysts added.

 

The variability of outside market price movements had an influence on direction with wide price ranges in wheat futures spilling over to send prices testing either side of unchanged levels during the day, traders said.

 

Expectations for tight carryover supplies in the USDA's supply and demand report coupled with the U.S. dollar index down quite sharply provided underpinning strength for prices, said Anne Frick, senior oilseed analyst with Prudential Bache Commodities in New York. Lingering uncertainty over next week's weather conditions in Argentina added strength as well, traders added.

 

However, after a bullish run to new all-time highs recently and a major USDA report on tap for Friday, traders were willing to even a few positions down the stretch, with a late drop in wheat futures and speculative fund selling helping send prices limping into the close, analysts added.

 

On tap for Friday, USDA is scheduled to be release its annual crop production, quarterly grain stocks, and supply and demand projections at 8:30 a.m. EST. The average of analysts' estimates peg 2007-08 U.S. soybean ending stocks at 170 million bushels, down 15 million from December's forecast. The average of analysts' estimates point toward 2007 soybean production at 2.584 billion bushels, down from 2,594 billion in November. The average of analysts' estimates project Dec. 1 U.S. soybean stocks at 2.268 billion bushels from estimates that ranged from 2.240 billion to 2.316 billion bushels.

 

The DTN Meteorlogix weather forecast said weather maps Thursday morning indicate upper-atmosphere high pressure building back into Argentina over the weekend into early next week. This development would promote another round of hot and dry weather. This ridge is expected to drift westward towards the Chilean coast during the middle of next week, allowing for some rain to develop in the corn and soybean areas. However, this development is uncertain, Meteorlogix said. There is also a chance for dryness to work northward into Rio Grande do Sul in southern Brazil, Meteorlogix added.

 

In pit trades, buyer and sellers were scattered among various commission houses, with speculative funds estimated net buyers on the day.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil rising in the face of spillover pressure from soybean and crude oil futures. Soyoil futures were buoyed by speculative and commercial buying, with supportive weekly export sales and long range fundamentals helping futures shake off the effects of stumbling prices in energy futures, analysts said.

 

Soymeal futures were lower, experiencing two-side price action in unison with soybeans. A lack of fresh supportive news left futures without an upside catalyst, leaving futures vulnerable consolidative selling and oil/meal spreading, analysts added.

 

March oil share ended at 42.40% and the March crush ended at 69 3/4 cents.

 

In soymeal trades, Newedge USA LLC bought 400 July and 400 August. Bunge Chicago sold 500 March, JP Morgan sold 300 March and Rand Financial sold 200 March. Speculative funds were net sellers on the day.

 

In soyoil trades, Citi bought 500 March, Newedge USA LLC bought 1,000 March and 500 May. Tenco sold 500 August. Commercial buying was estimated at 2,000 lots and speculative fund buying was estimated at 2,000 lots.