March 3, 2009

 

CBOT Soy Review on Monday: Tumble; economic woes weigh on market

 

 

Chicago Board of Trade soybean futures ended lower across the board Monday, tumbling on speculative led sales attributed to bearish economic influences.

 

CBOT March soybeans settled 26 cents lower at US$8.48 1/2, and May soybeans ended 28 cents lower at US$8.44. November soybeans settled 34 1/2 cents lower at US$7.93.

 

May soy meal settled US$9.00 lower at US$260.80 per short tonne. May soyoil finished 77 points lower at 30.34 cents per pound.

 

The combination of sharply lower crude oil futures, the Dow Jones Industrial Average tumbling below the 7,000 level, and a firmer U.S. dollar served as catalysts to attract speculative sales, analysts said.

 

Economic woes in conjunction with falling financial markets sparked an exodus from riskier products to the safe havens of U.S. Treasuries, gold and the U.S. dollar, said Mike Zuzolo, analyst with Risk Management Commodities in Lafayette, Ind.

 

In the absence of fresh supportive fundamental news, futures had less need for premium in the market, with outlooks for demand from China to decline and favorable late season weather for Argentina crops adding to the losses, Zuzolo added.

 

The most active May future's intraday low of US$8.38 1/4, was the lowest level for the contract since December 10.

 

The market is taking into effect the possibility of reduced export demand, with Chinese buying likely headed to South American origins and with technical weakness and a sluggish domestic crush, there was no reason to rally prices, analysts said.

 

Looking ahead, traders will eye developments in the rift between Argentina farmers and the government, as a renewal of a farmers strike is seen supporting U.S. exports.

 

Argentina is studying the creation of a new federal entity to control the trade of grain and beef - allowing the government to dominate the market - but is apparently stopping short of the full nationalization that the press last week said was in the pipeline.

 

Talk of the new agency comes amid tense negotiations between the farmers and the government to avoid a repeat of last year's crippling farm strikes.

 

In pit trades, speculative fund selling was estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, succumbing to speculative sales associated with the negative economic outlooks of the market. Sharp declines in crude oil futures affected soyoil, while the threat of lost export demand and slow domestic demand helped cement soymeal in negative territory, analysts said.

 

May oil share ended at 36.79% down from Thursday's close of 36.57%. The May crush ended at 63 1/2 cents.

 

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