February 3, 2009

 

CBOT Soy Review on Monday: Stumbles on Argentine weather, economy woes

 

 

Chicago Board of Trade soybean futures stumbled Monday, succumbing to speculative selling, as improved weather conditions for Argentina and bearish economic outlooks pressured prices.

 

CBOT March soybeans finished 20 1/2 cents lower at US$9.59 1/2. March soy meal settled US$4.80 lower at US$306.20 per short tonne. March soyoil finished 97 points lower at 31.76 cents per pound. In pit trades, speculative fund selling was estimated at 3,000 lots.

 

Forecasts calling for more rainfall this week in drought-stricken Argentina crop areas following scattered light showers during the weekend, served as the spark for traders to trim risk premium from prices, analysts said.

 

The moisture is seen providing some much-needed moisture for crops heading into their critical pod filling stage of development.

 

Lingering concerns surrounding the state of the U.S. and global economy was another feature keeping buyers hands in their pockets, a CBOT floor broker said.

 

Traders are taking a cautious approach amid uncertain economic outlooks, with spillover pressure from crude oil, precious metals, equities and a firmer U.S. dollar index weighing on prices, analysts said.

 

However, futures ended well off their lows, as traders remained cautious of near-term Argentina weather amid speculation the rains may only limit further losses and not offset the adverse stress the crop has been subjected to during the bulk of the growing season.

 

Looking ahead, traders are expected to keep a close eye on demand, checking to see if China begins to divert its buying to South American origins.

 

Meanwhile, forecast models suggest fairly good rain coverage from the 2 systems that will cross Argentina's crop belt this week, Cropcast Weather Services forecasts. This will bring near-term relief to dryness concerns in most of the corn and soybean areas, although rain totals do not appear likely to be particularly heavy. Much of the belt is likely to see rain totals end up in the 0.50 to 1.0 inch range, and this will be sufficient to ease stress for about a week.

 

However, the forecast then turns much drier for the 6 to 10 and 11 to 15 day periods, and there is also a fairly good chance for more sustained warmth showing up toward mid-month, Cropcast added in the forecast.

 

 

SOY PRODUCTS

 

Soy product futures dropped in unison with soybean futures Monday. Soymeal futures retreated to 2 1/2 week lows, backpedaling on less threatening Argentine weather conditions. Soyoil futures garnered pressure from weakness in crude oil, with the most active March future sliding to its lowest level since Dec. 26.

 

Light meal/oil spreading helped reduce product share for soyoil as well. The oil share percentage, which represents soyoil's contribution to total soybean value, is below the 35% level, its lowest level since late 2005, and down from near 40% in late 2008.

 

March oil share ended at 34.15% and the March crush ended at 63 1/2 cents.

 

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