August 7, 2008

 

CBOT Soy Review on Wednesday: Sharply lower on speculative sales as rumors swirl

 

 

Chicago Board of Trade soybean futures ended sharply lower Wednesday, dropping to three-month lows on speculative sales and rumors of fund liquidation.

 

August soybeans settled 42 cents lower at US$12.20 1/2 and November soybeans ended 47 cents lower at US$12.22.

 

December soymeal settled US$12.70 lower at US$326.80 per short tonne. December soyoil finished 155 points lower at 52.605 cents per pound.

 

There was no fundamental news behind the steep break and traders cited rumors that an unnamed fund liquidated a large long position - possibly as much as 38,000 contracts - as being behind the break, analysts said.

 

The rumors were never substantiated, with CBOT and Commodity Futures Trading Commission both stating they both took no market action against any firm.

 

Weather conditions in the U.S. Midwest continue to be a bearish background influence, with the lack of any crop threat and spillover weakness in outside markets aiding the price decline.

 

There was liquidation seen across many asset classes, indicative of banks taking off inflation hedges in an attempt at equity preservation, said Mike Zuzolo, analyst with Risk Management Commodities Inc., in Lafayette, Ind.

 

Both September and November soybean contracts traded sub-US$12 in a mid-session sharp sell-off, with the November contract briefly hitting limit down 70 cents. The move to limit down was short-lived as November soybeans cut losses significantly, but still ended the session lower.

 

The market is firmly planted in a lower trend, but oversold conditions and lingering uncertainties surrounding yield, production, acreage and stocks remain supportive features that could ignite a bounce at any time, traders said.

 

On tap for Thursday, U.S. Department of Agriculture at 8:30 a.m. EDT will issue its weekly export sales report. Soybean sales are estimated at 300,000 to 650,000 tonnes. Soymeal sales are projected in a range of 100,000 to 200,000 metric tonnes, with soyoil sales expected in a 5,000- to 15,000-tonne range.

 

Speculative fund selling was estimated at 7,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended sharply lower, tumbling in unison with soybeans. Speculative-led selling was featured, with soyoil dropping to four-month lows and soymeal retreating three-month lows.

 

December oil share ended at 44.59% and the November/December crush ended at 75 1/2 cents.

 

Speculative fund selling was estimated at 4,000 lots in soymeal and 4,000 lots in soyoil.

 

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