February 14, 2009

 

CBOT Soy Review on Friday: Bearish weather outlooks press prices

 

 

Chicago Board of Trade soybean futures settled lower Friday, continuing the week's downward spiral, as futures extract risk premium on bearish weather outlooks for Argentina crops.

 

CBOT March soybeans finished 13 cents lower at US$9.55 1/2. March soymeal settled US$7.00 lower at US$297.70 per short tonne. March soyoil finished 17 points higher at 33.00 cents per pound.

 

In pit trades, speculative fund selling was estimated at 3,000 lots. Improved rain potential for some Argentina crop areas next week provided the fundamental spark to extend the week's defensive tonnee, said Anne Frick, senior oilseed analyst with Prudential Bache in New York.

 

The potential for added showers that could reduce the amount of Argentina crops suffering from drought, continued to take the edge off prices.

 

The forecast has become more promising for Argentina, as some of the better shower potential could now reach into drier portions of northwestern Santa Fe and northern Cordoba by later next week, according to Cropcast Weather Services.

 

A quiet news front kept attention on weather, with technical selling coming into play as prices retreated to new lows for the week. Most active contracts dropped for the fourth consecutive day.

 

Downside pressure had little resistance as buyers maintained a cautious approach, unwilling to take on added risk heading into an extended holiday weekend, a CBOT floor analyst said. In the face of bearish weather forecasts and an uncertain economic climate, market bulls were content to stay on the sidelines, he added.

 

CBOT markets will be closed Monday in observance of Presidents Day. The markets will reopen with Monday evening's overnight session.

 

Nevertheless, supportive underlying export demand in conjunction with a tighter old crop balance sheet and strong gains in crude oil managed to limit losses, traders said.

 

Meanwhile, the National Oilseed Processors Association is expected to estimate January's soybean crush at 138.1 million bushels, modestly higher than the preceding month amid increased meal export demand, according to a survey of industry analysts. NOPA is expected to release its figures Tuesday at 8:30 a.m. EST (1330 GMT). NOPA soyoil stocks in January are expected to increase by 56 million pounds to 2.233 billion pounds from the 2.176 billion reported in December.

 

 

Soy Products

 

Soy product futures ended mixed, with soymeal stumbling on the potential for improved crop conditions in Argentina and technical weakness. Soybeans have mostly meal content, so improved soybean production prospects have a definite impact on soymeal prices, analysts said. Technical selling was featured, with prices falling to new lows for the week while piercing through psychological support at the US$300-per-short-tonne level.

 

Soyoil futures ended higher, benefiting from the unwinding of meal/oil spreads and spillover support from strength in crude oil futures, analysts said.

 

March oil share ended at 35.66% and the March crush ended at 62 1/2 cents.