The entire US soyabean complex on the Chicago Board of Trade dived their respective trading limits on Friday on a technical sell-off, traders said. Soyabeans, soyameal and soyaoil were undergoing a big technical correction after recent rallies, which included soyabeans and soyaoil making a series of all-time highs in recent weeks.
"Big prices have big corrections," said analyst Roy Huckabay of The Linn Group. All three soya markets were experiencing a technical reversal, falling below last week's lows, traders said. The selling started this week as financing woes among some investment funds forced them to liquidate positions to meet margin calls in different financial arenas, largely linked to the subprime debacle.
The selling spilled over to commodities after their roll to record highs in 2008. Wall Street money has poured into the grains, oils, and metals markets since the first of the year as speculators looked for alternative investments amid the poor performing stock market.
"This credit crunch is really grabbing people. We started to see hedge fund money pulled out of CTAs last week," Huckabay said. The other leg of the sell-off in the CBOT soyabean complex was weakening vegoil prices in China. There's been talk among Chicago grain traders that Beijing released some 600,000 tonnes of vegoil stocks out its reserves to help ease food inflation, which hit an 11-year high this year.
"Their vegoil prices rallied 34 percent in about three weeks. This week, they've setback 10 percent and they're still 30 cents above what's trading in the rest of the world," Huckabay said. May soyabeans ended down the 50-cent limit at $14.08-3/4 per bushel. May soyameal was down the $20 limit at $350.30 per ton.
May soyaoil was down the 2-cent limit at 63.33 cents per lb. Late options trade indicated that May soyabeans were priced 48 to 49 cents per bushel lower and May soyaoil was 2.08 cents to 2.33 cents lower. The March contracts, now in delivery, were even weaker as they were trading without limits. March soyabeans ended $1.02 per ton lower at $13.41. Commodity funds sold about 5,000 soyabean contracts, 5,000 soyameal and only 1,500 soyaoil as it was locked lower most of the day session.
Volume light to moderate as futures stopped trading after they fell the limit. Estimated soyabean trade was 91,298 futures and 47,706 options. Soyameal was volume was pegged at 72,277 futures and 4,909 options. Soyaoil trade was seen at 39,854 futures and 9,491 options.
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