January 30, 2009

Chicago Board of Trade soybean futures ended lower Thursday, succumbing to speculative sales associated with Argentina's weather and economic uncertainty.

 

CBOT March soybeans finished 12 cents lower at US$9.70 1/2. March soy meal settled US$2.80 lower at US$308.70 per short tonne. March soyoil finished 54 points lower at 32.37 cents per pound.

 

Improved weather outlooks for parts of Argentina, particularly the Cordoba province, provided some pressure to take the edge off prices, said Anne Frick, senior oilseed analyst with Prudential Bache in New York.

 

The daily contrast in weather outlooks is promoting cautious activity, with bullish traders leery of improved rain potential, as Argentine crops moved ahead into their critical pod filling stage of development. The market continues to consolidate within a recent trading range, as participants attempt to gauge the size of the South American crop.

 

Global economic woes added to the defensive tone, with weakness in stock indexes and in the energy sector sending bearish outside signals to the market, Frick said.

 

Meanwhile, the phenomenon of the "February Break" was seen having a bearish psychological impact on the market as well. Seasonally, from mid-January to mid-March, prices stage a retreat relating to farmer selling for tax and cash flow purposes.

 

Otherwise, futures had little fresh fundamental support to offset the declines, with export sales near the low end of estimates and the December Census crush report failing to provide any surprises.

 

The DTN Meteorlogix Weather forecast for central Argentina crop areas calls for mostly scattered thunderstorms every four to six days.

 

Coverage varies with each chance. It looks like a more favorable weather pattern for Cordoba crop areas. Drought will continue for La Pampa and southwest Buenos Aires. The other areas are more uncertain. There is no indication that weather patterns approaching the key soybean-reproductive month of February are going to have a major change to more favorable rainfall.

 

Looking ahead, traders anticipate the recent trend of choppy activity will continue, as the trade remains focused on the size of South American crop and future demand.

 

In pit trades, speculative fund selling was estimated at 2,000 lots.

Soy Products

                                   

Soy product futures ended lower, falling under the weight of weakness in soybeans, Argentina rain potential and bearish outside market impacts. Soymeal futures stumbled on Argentine weather, while soyoil was consumed by speculative sales associated with weakness in energy markets, analysts said. Soyoil lost product share to soymeal, with soyoil's percentage of total soybean value down at its lowest level since late 2005.

 

March oil share ended at 34.4% and the March crush ended at 64 3/4 cents.

 

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