January 23, 2009

 

CBOT Soy Review on Thursday: Stumbles on weather changes, economy woes

 

 

Chicago Board of Trade soybean futures ended Thursday's trading session lower, backpedaling off Wednesday's gains on Argentine weather forecasts and bearish economic outlooks.

 

CBOT March soybeans finished 8 1/2 cents lower at US$10.12. March soy meal settled US$2.20 lower at US$318.20 per short tonne. March soyoil finished 42 points lower at 33.53 cents per pound.

 

A change in the Argentine weather forecast that points to improved weekend rainfall potential in the region set the tonnee to attract speculative sales, said Mike Zuzolo, analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

The influence of outside markets with continuing economic bad news provided another twist to keep buyers on the run, analysts said. U.S. equities were lower, crude oil futures stumbled and the U.S. dollar index was higher, all the ingredients needed for bearish price action.

 

Nevertheless, the market continues to have a lot of sensitivity to rainfall in Argentina, while the persistence of weather models showing more potential for a rain event to develop in Argentina kept pressure on prices, said Bill Nelson, analyst with Doane Advisory Services.

 

However, downside pressure was limited by analysts' views that the rain showers will do little to alleviate the threat of production losses for drought-stricken Argentine crops.

 

The DTN Meteorlogix weather forecast calls for central Argentina crop areas to remain hot and dry through the end of the week. Temperatures of 95-100 degrees Fahrenheit will continue to stress developing crops.

 

Meanwhile, central Argentina will have a cold front passage during Sunday. However, there are signs that associated thunderstorm activity with this front will split with one package moving northward through Cordoba while another tracks eastward across northeast Buenos Aires, Meteorlogix said. This means some may benefit from these rains while some will miss out. In either case, hot dry weather returns to the region by the middle of next week.

 

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 600,000 to 1,000,000 tonnes. Soymeal sales are projected in a range of 75,000 to 125,000 metric tonnes, with soyoil sales expected in a zero to 10,000-tonne range.

 

In pit trades, fund selling was estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower in step with losses in soybeans. Consolidative price action following recent gains was the theme of the day, with the markets easing off Wednesday's gains on improved rain chances from Argentina soy crops. Soyoil futures lost product share to soymeal on spreads again, with spillover weakness from crude oil aiding the declines, traders said.

 

March oil share ended at 34.63% and the March crush ended at 56 3/4 cents.

 

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