January 28, 2009

 

CBOT Soy Review on Tuesday: Lower on rain prospects, broad weakness

 

 

Soybean futures on the Chicago Board of Trade backpedaled lower Tuesday, stumbling on improved weather prospects for Argentina and broad-based commodity selling.

 

CBOT March soybeans finished 33 cents lower at US$9.76. March soy meal settled US$7.70 lower at US$308.60 per short tonne. March soyoil finished 100 points lower at 32.77 cents per pound. Weather forecasts pointing to improved rain potential for Argentina crops served as a catalyst to pressure prices, analysts said.

 

Selling across a wide range of commodities tied to economic woes provided additional weakness to aid the defensive tonnee, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

Contrasting weather models had traders leery of long positions amid fears a good soaking rain could improve Argentina crops heading into their critical pod filling stage of development, analysts said.

 

Profit taking on prior gains was featured with technically inspired selling adding to the losses. The ability of active contracts to penetrate the psychological US$10.00 level, 10-day, 20-day and 100-day moving averages triggered sell stop orders, analysts said.

 

The potential for a seasonal February price break occurring soon is keeping buyers cautious. In addition, the market is starting to come to grips with ideas setbacks in Argentine production could be offset by that country's large carryover stocks.

 

However, Argentine President Cristina Fernandez declared Monday that the country was suffering from an "agricultural emergency" brought on by a devastating drought affecting farms and ranches around the nation was seen limiting losses, analysts said.

 

GFS and European weather models both indicate wetter Argentine weather in the six- to 10-day period, but the wetter scenarios are achieved in much different ways, Cropcast Weather Services said Tuesday in a morning outlook.

 

Cropcast opts for the GFS solution, with rainfall scaled back in eastern Argentina as a ridge may suppress much of this activity. This could still allow up to a third of corn and soybeans to hold onto dryness concerns through the end of the 10-day period, with Cropcast's forecast delaying a more generalized rain event until the middle of the 11- to 15-day outlook, Cropcast said.

 

 

SOY PRODUCTS

 

Soy product futures tumbled in unison with soybeans, succumbing to the price pressure associated with Argentine weather. Weakness across various commodities added to the losses, with profit-taking on prior gains and ideas the market is heading toward its February break attracting sellers.

 

March oil share ended at 34.63% and the March crush ended at 63 1/2 cents.