January 2, 2008

 

US soy falls in final trading day after 80-percent gain in 2007

 

 

Markets for US soy tumbled on its final trading day on December 31 after investors cashed out profits amid reaching 34-year highs, posting a gain of nearly 80 percent in 2007.

 

After skyrocketing to a series of record high prices this year, wheat prices ended mixed and remained unstable. The grain's prices reached its all-time high in mid-December of over US$10 per bushel, a huge 100 percent gain since early January.

 

Corn markets were also irregular on a two-sided trade after soaring to an 11-year high on Friday, up 60 cents per bushel or 15 percent for the year.

 

US soy futures prices for January delivery closed at US$11.99 per bushel, down 8-3/4 cents, corn for March delivery was up 3-1/2 at US$4.55-1/2 and March delivery wheat was unchanged at US$8.85 per bushel.

 

March spot wheat futures in the Chicago Board of Trade (CBOT) ended 2007 up 76 percent from the close for spot March on Dec. 29, 2006. On the other hand, March corn was up 14 percent and spot January soy was up 76 percent from the close in 2006.

 

Traders and analysts said almost all activities on Monday was end-of-the-year positioning and market players said they anticipated another wild trading year in 2008 as big investment funds kept commodities on their radar screen.

 

Investors have hugely purchased wheat, corn and soy in recent years in anticipation of continued huge demand for carbohydrates, sugars and proteins to fuel the global growth of biofuels, livestock and poultry production.

 

Traders expect funds to sell some wheat and soy in early 2008 while buying corn in their annual rebalancing of index fund portfolios.

 

Demand for grain and soy are expected to remain strong as global powers such as China, Russia and India try to keep food and fuel supplies at home and as the weak US dollar makes US products a good buy for overseas customers.

 

Russia last week said it would raise its export tax or tariff on wheat to 40 percent from the current 10 percent in an attempt to ensure domestic wheat supplies. 

 

China also declared tariffs between 5 and 25 percent on exports of some grains during 2008, the latest measure aimed at discouraging sales abroad as domestic food prices soar.