January 8, 2009

 

CBOT Soy Review on Wednesday: Retreats on technical sales, Argentina weather

 

 

Chicago Board of Trade soybean futures stumbled Wednesday, retreating from prior advances on technical selling, an absence of fund buying and improved Argentine weather outlooks.

 

CBOT March soybeans finished 26 cents lower at US$9.90.

 

March soy meal settled US$5.50 lower at US$295.50 per short tonne. March soyoil finished 113 points lower at 36.18 cents per pound.

 

The market took a pause after its month-long big run up from contract lows and, with fund buying seemingly running its course, traders booked profits, analysts said.

 

A possible change in Argentina's weather pattern to a wetter outlook, coupled with outlooks for increased U.S. soybean seedings in 2009, added pressure to keep futures on the defensive, said Anne Frick, senior oilseed analyst with Prudential Bache in New York.

 

A chance for significant rainfall continues during Sunday afternoon through Monday night across Argentina, T-Storm Weather forecasts. This is a good starting point for key growing areas of central Argentina, with the highest coverage and totals most probable on Sunday night and Monday from Cordoba through Santa Fe and Entre Rios.

 

Some thunderstorms are also probable across Paraguay and South Brazil on Monday-Tuesday as this system exits, but highest coverage and amounts are expected in Argentina from this event, T-Storm added in the forecast.

 

Overbought market conditions kept technical sellers in play, with selling pressure accelerating as futures slipped below the psychological US$10.00 level.

 

A lot of cash movement, as farmers took advantage of US$10.00 soybeans, helped generate fundamental pressure as well, said Bill Nelson, analyst with Doane Advisory Services in St. Louis, MO.

 

Outside market factors sent bearish signals to futures as well, with weakness in energies and gold and silver attracting broad based sales. Nevertheless, traders viewed the session's losses as more of a technical correction, as bullish underlying fundamentals remain underpinning features.

 

Meanwhile, given a pattern of "early and aggressive" soybean orders this growing season, Monsanto (MON) expects greater U.S. soybean plantings in 2009 than prior forecasts, a Monsanto executive said. The company originally forecast 2009 plantings of 90 million corn acres, 70 million soybeans acres and 8 million in cottonne and isn't yet offering exact adjustments.

 

In pit trades, speculative fund selling was estimated at 3,000 lots.

 

On tap for Thursday, the U.S. Department of Agriculture will issue its weekly export-sales report at 8:30 a.m. EST. Soybean sales are estimated at 375,000 to 500,000 tonnes. Soymeal sales are projected in a range of 30,000 to 100,000 metric tonnes, with soyoil sales expected in a zero to 10,000-tonne range.

 

 

SOY PRODUCTS

 

Soy product futures retreated in step with soybeans. Soyoil futures dropped on technical selling pressure, with a slowdown in the speculative fund selling that propelled prices recently attracting profit taking, analysts say. Borrowed weakness from sharply lower crude oil futures aided the defensive tonnee as well.

 

Soymeal futures ended lower as well, but lagged the declines seen in the rest of the complex. The market rallied the least of the complex in the past week, and had less of a correction to absorb, a trader said. A correction in the oil/meal spread limited meal's declines also, traders added.

 

March oil share ended at 38.06% and the March crush ended at 58 cents.

 

In pit trades, speculative fund selling was estimated at 2,000 lots in soyoil and 1,000 lots in soymeal.