August 2, 2006

 

CBOT Soy Review on Tuesday: Retreats as rains heads into midwest

 

 

Chicago Board of Trade soybean futures ended lower Tuesday, trading defensively amid the movement of beneficial rain showers into the Midwest.

 

August soybeans ended 6-cents lower at US$5.73 1/2, November soybeans finished 6-cents lower at US$5.93 3/4. December soymeal settled US$1.90 lower at US$167.10 a short tonne, while December soyoil ended 15 points lower at 27.39 cent a pound.

 

Near-term weather forecasts projecting rain and cooler temperatures moving into the central U.S., bringing an end to the current heat wave in the Midwest served as the catalysts for soybeans to tag range lows, said John Kleist of Kleist Ag Consulting.

 

However, a lack of conviction on the part of sellers limited declines, as traders remain reluctant to aggressively press the market with the crop still a few weeks away from completing its critical pod fill stage, Kleist added.

 

The defensive theme was consistent from the outset, as rains at this point in the season can greatly help the soy crop, analysts added. However, the continued deterioration of crop ratings kept traders reluctant to follow through on downside movement, with talk of corn/soybean spreading adding support to the market as well, trader said.

 

Otherwise, market attention was focused on the launch of side-by-side ag trading in daytime hours. Analysts said volume was better than expected. 43,911 ag contracts were traded electronically during the day session, according to CBOT.

 

Meanwhile, the DTN Meteorlogix forecast calls for this cool front to stall out in northern Iowa through the Great Lakes. The result will be thunderstorms with heavy rainfall of more than two inches in the northern Midwest, but very little change from the oppressive hot-weather pattern in the central, eastern and southern Midwest. The eastern Midwest has its best chance at rainfall on Thursday. However, rains will not be as plentiful as in the west and north - thunderstorms will generate up to three-quarters of an inch of rain, Meteorlogix forecasts.

 

Next week offers very little in the way of follow-up rainfall for the Midwest. The upper-atmosphere dome of high pressure which produced the current heat wave will make a return appearance to the region. Western Midwest crops will again be stressed by above normal temperatures and below normal precipitation. Eastern Midwest areas will have normal-to-above normal temperatures and normal-to-below normal precipitation, Meteorlogix reports.

 

In pit trades, ADM Investor Services bought 700 November, Fimat and Rand Financial each bought 400 November and Man Financial bought 300 November. Man Financial and Fortis each sold 500 November, JP Morgan sold 400 November and Fimat sold 300 November. Speculative funds were estimated net sellers on the day.

 

South American soybean futures ended lower, with the August future settling 6-cents lower at US$6.26 1/2.

 

 

SOY PRODUCTS

 

Soy products futures ended lower in tandem with soybeans. Soymeal futures stumbled lower, continuing its role of a follower in the absence of fresh supportive fundamental news. The active December contract sank to a new contract low, unable to find underlying support, analysts say.

 

Soyoil futures drifted lower, unison with the rest of the complex. However, market managed to gain product share, with biodiesel enthusiasm and technical strength enabling futures to hold above major moving average support, Kleist said.

 

August oil share ended at 45.16%, and the August crush ended at 72 3/4 cents.

 

In soymeal trades, Buyers were scattered among various firms. Speculative fund selling was estimated at 2,400 contracts, with Tenco selling 1,200 December, Calyon Financial selling 500 December and Shatkin/Arbor a seller of 400 December.

 

In soyoil trades, Term Commodities bought 1,000 December, Bunge Chicago bought 300 December, and JP Morgan bought 500 December. Bunge Chicago sold 700 December, JP Morgan sold 400 December, and Man Financial sold 300 December.