April 20, 2006


CBOT Soy Review on Wednesday: Lower; soyoil, outside markets limit slide



Chicago Board of Trade soybean futures ended Wednesday's session with modest losses, consolidating prior gains, with firm outside markets and surging soyoil futures provided support to limit declines.


May soybeans finished 1 1/2 cents lower at US$5.74; July soybeans ended 2 cents lower at US$5.87 3/4; July soymeal settled US$2.90 lower at US$175.40 a short tonne; and July soyoil ended 56 points higher at 24.27 cents a pound.


The market eased from previous gains, as the weight of bearish supply-side fundamentals and a lack of supportive speculative buying opened the door for price consolidation, analysts said.


However, the bullish influence of surging soyoil futures, the continued rise of precious metals and record high crude oil prices provided psychological support to limit selling pressure, traders add.


The theme was consistent for most of the day, with futures torn between bearish fundamentals and the spark of speculative interest in commodities as a whole. Otherwise, traders had little incentive to aggressively push the market, with a quiet news front keeping technical considerations in play.


The U.S. Department of Agriculture is scheduled Thursday to release its weekly export sales report for the week ended April 13. Analysts surveyed by Dow Jones Newswires anticipate soybean commitments in a range of 200,000 to 350,000 metric tonnes. Soymeal sales are expected in a range of 60,000 to 125,000 tonnes. Soyoil sales are pegged to fall within a range of zero to 10,000 tonnes.


The DTN Meteorlogix weather outlook said South America soybean areas will experience scattered showers with up to one-half inch of rain falling in both Brazil and Argentina during the rest of this week. However, harvest delays will be minimal and scattered, Meteorlogix adds.


In pit trades, ADM Investor Services bought 300 May and 300 July, FCStonnee bought 400 July, Man Financial bought 500 July and UBS Securities bought 400 November.


On the sell side, FCStonnee sold 300 May, ABN Amro, Citigroup, and O'Connor each sold 300 July, Man Financial and Rand Financial each sold 400 July and JP Morgan sold 500 July. Commodity funds were net sellers on the day.


South American soybean futures ended lower. The July futures finished 1 cent lower at US$6.04.





Soyoil futures ended sharply higher once again, rallying to over five-week highs. The bullish combination of technical strength and optimistic outlooks for biodiesel fuel demand in the face of record high crude oil prices uncovered a wave of speculative fund buying interest, analysts said.


The speculative community is hungry for investment in fuel-based commodities and with crude oil at record highs, alternative fuels like biodiesel - a product derived from soyoil - has gained increased attention, said a CBOT commission house broker. The funds had been short the market, but look to be flipping positions, he added.


The surge in soyoil sparked a rally in oilshare percentage, with soyoil/soymeal spreading a featured attraction as well, traders said.


Soymeal futures stumbled lower, pressured by the sheer impact of surging soyoil prices. The soyoil price strength created a big shift in the soyoil/soymeal spread relationship, as soyoil made strong strides in product share.


July oil share rallied to 40.89%, and the July crush was at 65 cents.


In soyoil trades, ABN Amro, Goldenberg Hehmeyer and O'Connor each bought 300 July, Citigroup bought 500 May and 600 July, Fimat bought 700 July, Man Financial bought 80 May and 700 July, RJ O'Brien bought 400 July, UBS Securities bought 800 May, 2,000 July and 800 December. Commodity fund buying was estimated between 10,000 and 11,000 lots.


In soymeal trades, Citigroup bought 900 July and 300 May, Prudential Financial bought 300 July and RJ O'Brien bought 300 May. ABN Amro sold 500 July, JP Morgan sold 300 July, O'Connor sold 1,000 July. Commodity funds were sellers of near 2,000 lots.


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