February 11, 2009

 

CBOT Soy Review on Tuesday: Stumble on profit taking, financial market weakness

 

 

Chicago Board of Trade soybean futures ended lower Tuesday, pressured by profit taking off recent gains and bearish financial market influences.

 

CBOT March soybeans finished 8 cents lower at US$9.94. March soy meal settled US$1.70 lower at US$312.10 a short tonne. March soyoil finished 59 points lower at 33.64 cents a pound.

 

After rallying into Tuesday's session, traders took the opportunity to book some profits after the U.S. Department of Agriculture's supply and demand report was seen as friendly but not bullish to the market, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The balance sheet estimates came in a little higher than the trade expected and traders took profits on gains that had accrued since Thursday, Hannagan said.

 

The bearish influence of broader economic markets, with U.S. equities posting sharp declines amid the economic uncertainty, made it hard to buying into the market. Speculative funds were seemingly lined up to sell a higher opening, a CBOT floor trader said.

 

Nevertheless, the South American weather remains the underlying theme in the market, with fears of further yield losses resulting from stressful weather providing support to lift futures off session lows and limit downside risks, said Greg Wagner, analyst with AgResource Company in Chicago.

 

Forecast maps are clear in terms of moisture for central Argentina, said DTN Ag Weather meteorologist Joel Burgio. No rain is expected, and temperatures are warm and getting warmer. They will be in the 90's Fahrenheit by Friday, and that is expected to last at least through the weekend, he added.

 

The USDA lowered Argentina soybean output 5.7 million tonnes to 43.8 million metric tonnes, and Brazilian soybean production was trimmed 2 million tonnes to 57 million metric tonnes. Paraguay soybean production was reduced to 4 million tonnes, down 1.6 million, also due to hot, dry weather.

 

USDA estimated 2008-09 U.S. soybean ending stocks at 210 million bushels, down from its previous forecast of 225 million, but above the average of a Dow Jones Newswires survey of 203 million bushels.

 

 

SOY PRODUCTS

 

Soy product futures stumbled in step with soybeans. The markets backpedaled off recent gains, consolidating as futures take a breather from recent action amid a lack of a bullish surprise in Tuesday's supply and demand reports. Soyoil futures gave back some product share, with spillover weakness from crude oil and other financial markets weighing on prices, analysts said.

 

March oil share ended at 35.02% and the March crush ended at 62 3/4 cents.

 

In pit trades, speculative funds were estimated sellers of 2,000 lots.