Soybean futures at the Chicago Board of Trade tumbled on Friday in a technical breakdown, with November slipping below $5.76-1/2 support and filling a chart gap left open following last week's rally after USDA's crop report, traders said.
The weakness in soybean oil and worries about waning soymeal demand due to the spread of the deadly bird flu cast a bearish tone. Soymeal is a major poultry feed.
"I have a feeling that what's moving the market today is probably some fund-type selling in commodity markets in general, specifically maybe in some index fund-related selling," said Anne Frick, oilseed analyst with Prudential Securities.
"That would fit with the fact that oil and beans are weaker than the meal because oil and beans are included in some of the indexes but meal is not included," she said.
November soybeans closed 12-3/4 cents lower at $5.72-1/4 per bushel. November slid through nearby support and began filling a day chart gap between $5.76-1/2 and $5.66-1/2, created on October 12 when the government released a soy stocks estimate that was smaller than expected.
Commercials and commodity funds were sellers. Funds sold about 9,000 lots by the midsession, with Calyon selling 1,500 November, traders said.
Volume was heavy, estimated by the exchange at 98,018 futures and 27,929 options.
Friday was the last trading day and the expiration of November soy options. Earlier, traders eyed the $5.80 strike price as an area of possible volatility due to the heavy open interest at that level. But the market quickly moved away from that strike when November slipped through nearby resistance.
Midwest cash basis bids for soybeans were firmer early Friday as dealers tried to stir more farmer sales. Ample supplies of US soybeans and an active crush pace as processors keep crushing cheap soybeans were also viewed as bearish. Recent rains in some of the drier soy production areas of South America added to the early bearish sentiment. Mostly dry weather across the Midwest promoted harvest this week. However, rains over parts of Iowa, Nebraska and Missouri slowed some fieldwork, said Meteorlogix weather service on Friday. There were scattered showers of up to 1.00 inch in the eastern belt. More rain was forecast for the eastern Midwest on Friday, while the west should be mostly dry. The soyproducts were weaker. December soymeal slipped below $170 per ton for the first time in over a week. December settled at $169.40, down $2.50, with deferreds $1.50 to $2.60 lower.
Soymeal volume was estimated at 21,061 futures and 1,558 options.
Softer US cash soymeal markets amid an aggressive crushing pace loomed over futures along with concerns about waning export demand due to bird flu.
December soyoil closed 0.50 cent per lb weaker at 23.48 cents per lb, with the back months 0.45 to 0.56 lower.
Soyoil volume was estimated at 23,303 futures and 6,483 options.
Soyoil was pressured by technical sales, with funds selling 4,000 contracts. Commercials were buyers of about 3,000 lots.
Lower crude oil prices weighed on soyoil early, and the market never recovered despite a firm close in energy prices. The soybean oil market has followed the volatile moves in the energy markets over the past month amid prospects for increased demand to produce biodiesel, traders said.
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