February 21, 2009

 

CBOT Soy Review on Friday: Economic woes extend slide; market at 2-month low

 

 

Chicago Board of Trade soybean futures ended lower Friday, extending the market's two-week downtrend, as economic woes continued to send buyers running for cover.

 

CBOT March soybeans dropped 22 cents to US$8.62 1/2, May soybeans settled 22 3/4 cent lower at US$8.63 1/4, and November soybeans finished 14 1/2 cents lower at US$8.30 1/2.

 

March soy meal settled US$6.50 lower at US$270.00 per short tonne. March soyoil finished 20 points lower at 30.22 cents per pound.

 

The market carved out new two-month lows, with a flight to quality from riskier investments to the safe haven of gold and treasuries producing broad based selling, analysts said.

 

Outside markets were reflective of this theme with stock indexes and crude oil lower, while strength in the U.S. dollar applied additional pressure to pin soybean prices in negative territory.

 

Meanwhile, timely rains in Argentina and southern Brazil provided fundamental weakness. Analysts are expecting the rains will reduce the amount of crops under stress in South America.

 

Trade talk of China canceling some cargoes of previously purchased U.S. soybeans coupled with Brazilian harvest pressure were additional factors helping sustain the defensive tonnee, analysts added.

 

The unwinding of old, new crop spreads was featured as well, with declining South American crop concerns narrowing the July, November spread to 38 3/4 cents premium July from Thursday's 46 1/2 cents.

 

The DTN Meteorlogix Weather forecast for the central Argentina crop belt calls for rainfall of from one inch to two inches in the northern half of the region during Friday into Saturday. The main provinces for this moisture will be Cordoba, Santa Fe, and Entre Rios. This sector of the central crop belt produces three-quarters of Argentina's soybean crop. Precipitation will be lighter, and crop stress greater, in Buenos Aires and La Pampa. However, the improvement in the northern areas of the belt is significant enough that the Argentina total soybean crop may have a higher number than USDA's current projection of 43.8 million metric tonnes, Meteorlogix said.

 

In Brazil's Rio Grande do Sul province - the third-largest soybean producer - has similar rainfall of up to 2 inches ahead during the next 24 to 48 hours. This moisture will be very timely for soybeans during their pod-filling stage, Meteorlogix reports.

 

 

Soy Products

 

Soy product futures retreated in step with declines in soybeans, falling on speculative selling attributed to bearish economic outlooks. Fears of a slow down in export demand due to global economic unrest were featured. Meanwhile, soyoil gain product share on spreads, finding support from crude oil's ability trim losses down the stretch, analysts said.

 

March oil share ended at 35.88% and the March crush ended at 64 cents.